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Public Services (Social Value) Bill

Volume 734: debated on Friday 27 January 2012

Second Reading

Moved By

My Lords, it is a privilege and pleasure to introduce this Second Reading debate. In doing so, I declare an interest as chair of Live Sport, a community interest company which has contracts with public sector bodies.

The background to the Bill is that it was introduced in the Commons in November 2010 by Chris White, MP for Warwick. As a new MP, he was fortunate enough to come very high in the ballot for Private Members’ Bills and decided to adopt a measure which would have real impact. He steered the Bill through the Commons with determination and conviction. The fact we are debating this measure today owes a huge amount to him.

I am also grateful for the support that the measure received and continues to receive from the Opposition and, of course, from the Government. Without the enthusiastic support of Nick Hurd MP, the Minister responsible for this measure in the Cabinet Office, the Bill would have failed because, in order to gain overall government support, it was necessary to gain formal support from across the whole of Whitehall. Not surprisingly, that took a great deal of effort.

The Bill before us today is mercifully short but has the potential to transform the way in which public bodies procure services. It requires them, for the first time explicitly, to consider how what is proposed to be procured might improve the economic, social and environmental well-being of the area to be covered by the contract—that is, the social value of it. By public bodies is meant all those English and some Welsh bodies covered by the Public Contracts Regulations 2006, which includes local authorities, government departments, NHS trusts and a plethora of other bodies including your Lordships’ House. In effect, the Bill applies to the whole of the public sector.

Why is the Bill necessary and what benefits will it bring? The truth is that the Bill should not be necessary. The regulations just mentioned allow a public body to choose a supplier whose tender is the most “economically advantageous” and then defines economically advantageous to include factors such as environmental characteristics and quality as well as price. There is therefore nothing in theory to prevent a public body assessing the social value of competing tenders as part of the procurement process. Some local authorities already do this—for example, Camden, Durham and Wakefield—but they are a small minority. There is a strong tendency among public sector procurers to be risk-averse and conservative in their choice of suppliers. The old adage that nobody ever got sacked for buying IBM applies in modified form with large, traditional suppliers being the default option. This Bill seeks to challenge that mentality by requiring procurers to look beyond price—while obviously still paying due regard to it—and ask what social value particular suppliers could bring to the community.

What do we mean by social value and why is it important? Social value is really the added value you can get when a supplier, as part of fulfilling a contract, also contributes to the public good in ways that go beyond simply meeting the basic contract terms. The best way to think about social value is to look at some examples of what it means in practice. Typical examples might be a mental health service which employs people with a history of mental health problems to deliver the service, a transport company that tenders to run bus services and offers to provide added value through the delivery of a dial-a-ride service, or a housing management company which wins a contract to undertake property maintenance work and provides social value by committing to employ local apprentices.

It therefore surely makes sense for the public sector to seek such added value at any time and in all circumstances, but in the current economic environment this clearly assumes greater than ever importance. For by adding social value, a provider also contributes to broader public policy aims, whether in the sorts of ways set out above or by having a more holistic approach to public sector provision in an area as a whole—an issue that I am sure will be touched on by the noble Lord, Lord Mawson, later in today’s debate. In doing so, providers provide the state with overall greater value for money than under a more narrow, commercial approach.

There are a number of reasons why social enterprises are likely to provide this added value. They tend to have a stronger focus on users than other providers. They are often extremely innovative and flexible. They reach parts of the community that traditional providers sometimes cannot reach. And very importantly, they have high levels of public trust. At a time when some major public sector procurers, particularly in local government, appear to be making cuts that disproportionately hit the charitable and social enterprise sector, I hope that this Bill will go some way to cause them to reconsider whether the approach they are now adopting really results in best value for the taxpayer.

It might be useful to illustrate both what is possible when a social enterprise is given the chance to run significant programmes and also what constraints currently exist to the sector expanding. I should like to do so by reference to the leisure and sports sector. Local authorities’ leisure services have often been a Cinderella service and the ones most likely to be cut in times of economic downturn. They have not always been run in the most efficient way. However, in many areas the situation has been transformed by the contracting out of these services to local social enterprises. Just about the first and now most prominent of these is GLL, Greenwich Leisure, which, having started running the leisure facilities of Greenwich Council, now operates across London and beyond. GLL was recently in the news for winning the contract to manage two of the principal legacy venues of the Olympic Games—a clear demonstration of its track record and capabilities. GLL has succeeded like any good business by having a clear focus on quality provision but it has done so in ways that maximise the social value of what it does, particularly in the training and employment of local people—often young people with relatively few qualifications. Its example has been followed up and down the country, from Cornwall to Inverness, by local sports trusts, which have undoubtedly improved leisure facilities for the whole community in circumstances where any other business or organisational model would probably have failed.

The sector now provides some 30 per cent of public leisure centres in the UK and it is growing. But it feels that it could do more. A number of things constrain growth, including access to finance and management capabilities. One of the most pervasive problems is the process of bidding for and winning contracts. This is often an extremely frustrating, time-consuming and expensive business. A number of initiatives of government are trying to simplify the procurement process and help reach the target of 25 per cent of public sector contracts going to SMEs—a target that I believe is some way from being met. This Bill will play its part in weaning many procurement departments off a procurement process which can be blinkered and short-sighted. What applies in the leisure sector applies across public sector procurement.

In its initial version, the Bill related specifically to social enterprises because mutuals, co-ops, charities and community interest companies are by definition likely to be best able to provide this added social value. However, in discussion it became clear that many local companies—not least family-run businesses—also add social value and that it would be a mistake to exclude them from the scope of the Bill. The original version of the Bill also required the production of national and local social enterprise strategies. This idea did not find favour with the Government and was dropped in the interests of getting the Bill through the Commons and on to the statute book. The Bill now contains no explicit reference to social enterprise even though that is the sector to which it is principally aimed. I hope and believe that the single biggest beneficiary will be the social enterprise sector, simply because, as I have already said, organisations in this sector as a matter of routine deliver wider social value.

That is why the Bill is so strongly supported across the sector. In the run-up to Third Reading in the Commons, Social Enterprise UK, which has played a major role in supporting the Bill through its parliamentary progress and to which I pay tribute, co-ordinated a letter of support from the CEOs of 14 voluntary and social enterprise umbrella bodies. It said:

“We firmly believe that transforming procurement and commissioning is the best way to deliver effective and efficient public services, and if passed into legislation, the Bill will play a key role in enabling social enterprises and small businesses”,

to compete for public sector contracts.

Signatories to that letter included the CEOs of ACEVO, NCVO, Co-operatives UK, the Race Equality Foundation and Children England.

The Bill itself is easily described. Clause 1, which takes up 80 per cent of the Bill, states that, as part of the procurement process, which it defines, a public authority must consider how what is proposed to be procured might improve the social, economic and environmental well-being of the relevant area and how the procurement process itself might be undertaken so as to secure that improvement. It requires the authority to consider whether any specific public consultation should be undertaken. It excludes Scottish and Northern Irish authorities and those Welsh authorities whose functions are wholly or mainly Welsh devolved functions. I hope, incidentally, that the Governments of Scotland, Wales and Northern Ireland will adopt a similar measure in due course. The clause also explains that the authorities covered by the Bill are those covered by the Public Contracts Regulations 2006, the principal guidelines for public procurement in England and Wales. The remaining clauses are technical.

No single measure is going to transform the way in which public bodies procure services. Habits are deeply ingrained and innovation is routinely spurned. But as a country we must set our sights higher to ensure that public services really serve local communities by delivering social as well as financial value. This Bill will be a powerful step in that direction. I beg to move.

I am grateful to my noble friend Lord Newby for sponsoring this Bill, and thank the Government for their generous support for it, which is most welcome. I speak as one with a passionate interest in the content of and context behind this Bill, which I wholeheartedly support, not least because of my prior and ongoing work in fostering scalable social enterprise, in which I declare an interest, as well as more specifically being an adviser to the Community Foundation Network, a movement that seeks to enable giving at the local level, often alongside local and national commissioners.

I welcome the intention behind the Bill to promote engagement with and support for social enterprise, and want to focus my remarks on the suggested amendments to the process of commissioning public services in it to ensure that social value is taken more into account.

Some might question, wrongly in my view, why this Bill is necessary, given that, as has already been mentioned, the law already technically provides the flexibility for the public commissioning of services on a holistic basis. Indeed, many public bodies and commissioners recognise that the value of work tendered out has to be about more than saving money in the short term or satisfying minimum statutory requirements, and must take into account the other forms of value without which society fragments and costs for all become greater.

Such smart commissioners recognise, particularly in light of what we have witnessed dramatically throughout the financial and social crises that have marked recent years, that we need to try to cultivate and live in at least three kinds of economy, each with their own kind of value. First, there is the global economy, based on financial transactions, which encompasses everything from tax and spending to trade and investment, and so on. Secondly, there is the reciprocal economy, or what Avner Offer, paraphrasing Adam Smith, calls the economy of regard—that sense of community, however configured, in which we derive mutual support based on principles of reciprocity. Thirdly, there is the gift economy, driven by who we are, what we believe is right and wrong, and what we feel our call and passion is that compels us to help others with no expectation of reward or even recognition.

If we exist only in one of these economies, we become vulnerable when hard times or sudden changes come along, like a wrecked ship with only one section in its hull. If we cultivate all three, we become resilient, like a ship whose hull has multiple sections, able to draw upon funded support from the state, jobs or savings, on the support of our community, and on the support of friends, partners and fellow believers in our hour of need.

Smart commissioners intuitively try to minimise the damage to each of these economies in the way they tender, while promoting their autonomy, sustainability, and the innovation that comes when such economies or spheres overlap and work together rather than apart. Smart commissioners recognise that value includes but extends beyond that which is purely financial today. However, despite the flexibility already enshrined in law to enable smart commissioning, and despite the best efforts of smart commissioners, there remain too many people, I am afraid, who tender out contracts that conform to a more narrow definition of value—a definition that is, to put it crudely, too often about who can apparently deliver the most output for the least money and/or who has the best financial backing, irrespective of their ethos or approach, or who has the best track record of supplying to the public sector.

This is a definition that too often unfairly favours the supplier most adept at writing loss-leading bids, which may be subsequently renegotiated after they have been awarded over those that provide good honest value; the supplier who often has the best private sector backing over those such as charities or mutuals, which have limited reserves financially, even though they have ample reserves from the community of time, networks and skill; or the supplier who is the incumbent over the new market entrant on the basis that one is easier to manage than the other.

This is a definition that may seem to save money in the short term, and that apparently lowers risk, but that costs us more in the longer term, financially and otherwise, and potentially increases long-term systemic risk, as witnessed in major public sector procurement scandals that have arisen from time to time, when risk aversion or fear creates itself over time risk and moral hazard on a large scale—for example when suppliers become to big to fail, to negotiate better prices with, or just to lose.

In many such cases, the answer is to not use commissioning at all but to co-produce solutions or foster citizen-led services without using any or much money, just its power to convene through, for example, matched grants; or to embark on joint ventures where other partners can share the risk of managing new, small, and local suppliers—John Lewis partnership style. However, when commissioning remains the best way forward, this Bill will provide a much welcome nudge to get commissioners to consult properly and to consider the social benefits or otherwise of services that they are about to procure, not generally then to ignore them, which would be unwise, or even automatically to favour the non-monetary over the monetary forms of value, which is equally unwise, given our urgent need to reduce the national deficit, but to try to seek out where possible the solution that is best value over the short and long term financially, and that also can bring benefits of a non-financial nature—the win win rather than the either/or.

There are many areas of commissioning in which this opportunity for consideration would be of benefit. Central government procurement is a key area in health, work and pensions, and transport, to name but a few, where reductionism is rife and long-term value is not always taken into account. In an era of local authority spending restraint and de-ring-fencing, this Bill and its focus on the smart commissioner has heightened importance. Had it been in place earlier, perhaps we would have seen fewer or at least smarter reductions than those that have occurred in some local authorities, which have disproportionately targeted charities and social enterprises, as well as local sustainable businesses, and indeed much loved and valued local public services.

As an advocate of the big society, I have welcomed this Bill from the moment I first set eyes on it, and I am glad to see that it enjoys healthy cross-party support in both Houses. The direction of travel that the Bill exemplifies represents another example of the kind of shift that we need to see, putting more control into the hands of the community and those who are community minded and not just of vested interests, who have monopolised power for too long. It represents a crucial first step in making commissioning more citizen-orientated and less risk-minimisation orientated. I look forward to seeing other concrete future measures beyond this one, such as the power for citizens to recall suppliers in extreme cases, more commissioning that encourages collaborative work between suppliers and not just competition, and measures to make more joint commissioning the norm rather than the exception not just across the public sector but alongside the private and voluntary sectors. But for now, I can only recommend that we pass this Bill speedily.

Sometimes Conservatives are perceived unfairly not to care much about society, given our convictions about the importance of sound finances and their impact, good or otherwise, on future generations and our sustainability. But my honourable friend in the other place, Chris White, has shown how on the contrary Conservatives are actually on the whole socially responsible, caring, and innovative in thinking about how we use the scarce resources that we now have to maximise social value for the benefit of us all. For that, Chris deserves our thanks.

My Lords, first, I join the noble Lord, Lord Newby, in congratulating Chris White on having brought this Bill forward. He and I are fellow trustees of the Webb Memorial Trust; I have a feeling that Beatrice Webb would approve of this measure. I should also declare my interest as a trustee of a number of other charities, including one that deals with people with drug and alcohol misuse, which may well be able to take advantage of this Bill should it become an Act. It is not in that capacity that I speak but I most warmly welcome the Bill, as I believe it provides a fantastic opportunity to reform public sector procurement. In doing so, it will give thousands of social enterprises, voluntary organisations and charities the chance to provide services in their own communities. In the last year, the public sector must have spent tens of billions of pounds procuring services at a local and national level. This Bill will open up these contracts to voluntary organisations and charities at a time when, given the present economic situation, many are struggling—despite the great value that they offer to society.

I have a great belief that at all times, but particularly in today's economic environment, public money should always be used in the most effective way possible. Very often, the most effective way also helps to support the voluntary sector because of what it can bring to the table. Social enterprise, motivated by commitment but run on sound commercial lines, is an invaluable asset, but often such bodies face unfair competition. We therefore need to level the playing field to ensure that it is not just those large corporations that can bid for and win contracts, sometimes simply by spending the most on the commissioning process. Rather, we need to focus, as has already been mentioned, on quality of service delivery in output and effectiveness, in local or sectoral engagement, in expertise, in voluntary, user or consumer input, and in accountability. By including more social enterprises, voluntary organisations and charities in public sector provision, we can see quality improved and, in the longer term as well as in the short term, costs reduced.

This Bill makes really quite a simple change, but one that could be profound. Under it, the concept of value for money will not be diminished but will be widened to include social value. That means that instead of just considering who is providing the services and how cheaply they claim to do it—often, it is not quite as cheap as they claim—public bodies would also look at the additional benefits that would be derived if the service was provided by more innovative organisations. There are, as we have heard from the noble Lord, Lord Newby, examples across the country, including in our own area of Camden, where local authorities have adopted social value-led approaches in commissioning and with great success.

This Bill seeks to ensure that such benefits are spread across the country and that all organisations have to engage in similar smarter commissioning processes. It also stipulates that public bodies need to consider consultation when looking at implementing social value in their commissioning process. This is central, as social value will mean different things in different communities and in the different types of services that are being provided. I hope that the Bill will be passed, and if it is I hope that public bodies will consider particularly this clause about consultation and act in the spirit of openness that is at the heart of the Bill.

The Bill also allows local authorities to consider the whole locality when considering social value. This should allow the social impact of voluntary organisations and social enterprises to be appropriately assessed, so that their good work across and within our communities can be considered when public bodies are looking to increase social value. This could also have a positive impact on local job creation. In many parts of the country, the public sector remains a considerable source of employment. By ensuring that local employment opportunities are considered as part of social value in the commissioning process, the Bill could help to ensure that we can get as much out of the public’s money as possible. It is for this reason that the Bill has attracted tremendous cross-party support, as well as from numerous national organisations, as the noble Lord, Lord Newby, has mentioned.

Time, however, is critical as we rapidly—I think it is rapidly—approach the end of this parliamentary Session. We need to move quickly if this invaluable Bill is not be lost. If it was to be lost, that would significantly dampen morale in the voluntary and third sectors, which are going through tough times at the moment. The aim of the Bill, as summarised by the noble Lord, Lord Newby, in moving this Second Reading is to require public authorities to consider how a service that is being procured,

“might improve the economic, social and environmental well-being”,

of an area. This is an objective that we must all share. I therefore hope that your Lordships’ House will act in the spirit of consensus and ensure that this Bill receives a swift passage.

My Lords, I thank my noble friend Lord Newby both for picking up the mantle of this Bill and for the work he does on the All-Party Group on Social Enterprise. It is of course a fact that all providers are able to think about social value; it is also a fact that most of them do not, which is where there is a real gap and a need for social enterprises. There is a lot of talk about social enterprise, mutuals and not-for-profit at the moment, but it is interesting how many misconceptions there are about the sector. People think that somehow it is an offshoot of the voluntary sector; that social enterprise is something new; that social enterprises are necessarily small; and that they do not have profit-making as an objective. Of course these things can be true, but not necessarily.

I was a board member of the Lloyd’s Register, a not-for-profit distribution organisation which works in the field of safety. At 250 years old it certainly is not new, and with over 5,000 employees it certainly is not small. Last year, I went to talk to the head of Hackney Community Transport, which was originally a small dial-a-ride service and is now a multimillion pound business and operates some commercial services as well. Both demonstrate the key identifiers of social enterprise, its public good and its not-for-distribution profit, but both have also demonstrated that social objectives can be good, sound commercial business.

However, those two examples are exceptional in the field. Most social enterprises are small and operate locally, and in this is both their strength and their weakness—a strength because they offer tailored services, based on a real understanding of the needs of service users; but a weakness because, as we have heard, they find it very hard to get a foothold in the market for public services, which is dominated by large enterprises. There is a wealth of evidence from around the country that small social enterprises—as well as small businesses—face often insurmountable hurdles in the public procurement process, so this Bill is designed to address that most significant problem faced by the sector.

I have to be honest enough to admit to some misgivings about this approach. I do not much like duties and requirements being piled on to local government by central government. We have had far too much of that in the past. The previous Government introduced a general well-being power to local government, and the coalition has gone further by introducing the power of general competence. We also have the Sustainable Communities Act, which is relevant in this area, as is the right to challenge introduced in the Localism Act. Local authorities have the powers required by this Bill and some use them, as we have heard, but many more do not. Given this legislative framework and the wealth of evidence about how beneficial this sector is, we need to think about why this is simply not happening. It may be because some are blinkered, as my noble friend Lord Newby said, but it also comes down to two other things: money and capacity.

Local authorities have been finding savings year on year for some time and face a very stringent settlement this year. Rightly, their priority is the protection of front-line services so they strip away back-office functions, which include the staff who work on procurement and managing contracts. With fewer people working in that area, public authorities find it easier to manage fewer, larger, more straightforward contracts rather than a plethora of smaller suppliers offering services that really have to be thought about. This is not just an issue for social enterprises; it is a major problem for small local businesses. It is even happening now in the voluntary sector; I have been watching as around the country small local voluntary agencies have been losing local authority contracts to large suppliers.

There is another problem for local authorities. When you outsource something, you have to keep the risk in-house. If the service goes wrong, the risk remains with the local authority. That explains the risk aversion that we tend to see in local authorities that the noble Lord, Lord Wei, so trenchantly referred to.

The attitude of public procurement authorities is understandable, though short-sighted. I am afraid of going down the route of compulsory competitive tendering. I have watched that process for the past 30 years, and at the beginning large savings and efficiencies were indeed made and the regime was judged a success. Over time, though, as the smaller in-house suppliers disappeared, competition in the market lessened to the extent that in some areas—waste and local buses are two that spring to mind—there is now very little competition left in the market. That is bad for the public purse and for public services, and we must not go the same way in the social enterprise and voluntary sector.

The Bill, and government support for it, would go a long way towards sending a message to public bodies that they can adopt a different approach that values local services with the added public value that they can bring. It is a sad fact that local service providers still look very much to Whitehall departments for direction.

There are problems with measuring social value—it is not straightforward—and that is another area where the Government can help. As well as initiatives that are needed to improve the social enterprise sector, such as the creation of the School for Social Entrepreneurs or the academy proposals being developed by the noble Lord, Lord Mawson, we also need to work with the public sector to learn most effectively how we can evaluate and assess social value so that these factors can be taken into account by the decision-makers.

We also need to learn how to think about and measure the benefits of social enterprise that are much more difficult to measure: the improved productivity that comes along when people are motivated by working to their own objectives and feel a direct sense of responsibility to service users, and the community benefits that come from people working who are active and engaged in their own service delivery.

Words of support are all very well but there comes a time when action has to be taken. Passing this Bill will not of itself make things happen, but it will be an important first step. If social enterprises, SMEs and local charities benefit from this approach and thrive, the larger commercial organisations will also begin to think more seriously about social value, and then we all win.

Social enterprise is unusual. It does not matter what your political philosophy is; there is something in it for you. It is about enterprise, social value and communities, and it is often good for the environment. I am sure that we can all join together to support not just this Bill but other measures to help this sector to grow.

My Lords, in speaking to the Bill I declare two interests: as a director of the social enterprises One Church, 100 Uses, a national regeneration agency, and of the Water City Festival CIC, which is based in east London.

I thank the noble Lord, Lord Newby, for introducing this Private Member’s Bill in the graveyard slot at this point on a Friday afternoon. It is in my view a most important Bill because it seeks to put its finger on a very important issue: public sector procurement and the culture that prevails within public service provision in this country.

We in Britain used to be known as a nation of shopkeepers. Today we need to become known as a nation of enterprising communities. A business is a community, as is a local school, a hospital, a village, a town, a London borough and even an Olympic Park. In a country that is nearly bankrupt, the real challenge that we face is how we now unlock the energy and enterprise within Britain's many and varied communities. How can we once again discover the entrepreneurial skills in our DNA—our inherent ability, which our Victorian ancestors were so adept at, of making something out of nothing? This is the key issue at the core of the Bill. If the next generation are both to survive the present harsh economic climate and to make something out of it for themselves and their children, then they have to become adept at creating something out of very little. Navigating the processes of public service delivery and procurement must help them and not get in the way. This is the big challenge of our day that underpins this legislation.

In the people of this country there is a sleeping giant waiting to be woken from its slumber. You can see this giant dozing in many of our communities. I see it daily in the dependency culture of some of our most challenging housing estates. I know this as a fact because I have spent a great deal of my life working in some of our most deprived communities and know what can happen when you wake the beast. The people who make a real difference in communities—the local chemist, the doctor, the head teacher, the social and business entrepreneur—are already there, but feel ground down in bureaucracy and the countless ideologies that we have built around our systems of government. For those practical people it is very difficult to find the energy to wake and engage with the outside world because moving the bedclothes has become so hard. Despite the rhetoric from a number of different Governments about removing red tape, in my experience it is getting worse, not better. Words are easy but actions are hard. We cannot afford bureaucracy any more: it is too wasteful.

I was with a successful small businessman recently whose family has created a flourishing shopping arcade that allows local people at small cost, in a very straightforward way, to open a small market shop and grow their own business. The culture is good and the relationships are healthy, but he tells me that every time the local authority officer appears with the keys jangling from his belt, he fears the worst—another set of requirements, forms to fill in and processes to go through that will increase his costs and, eventually, those of his traders. Social entrepreneurs experience exactly the same thing as this business entrepreneur, and it is stifling innovation and creativity.

I have just sat through the Health and Social Care Bill with its many amendments and listened to this Government, as I have listened to three previous Governments, telling me as a practitioner and entrepreneur how they are seeking to improve the health service. This Government, like the one before, are of course right to try and do so and their aspirations are correct, but the culture is not and neither is it changing. Just look at the number of people taking sick leave or retiring early in the NHS: good people who want to do a good day’s work. Already, despite the many amendments and words in your Lordships’ House, the experience of my colleagues on the ground, operating in the machine, tell me that it is business as usual in the NHS. They tell me that the same old faces, the same old ways of working and the same oppressive culture of the health service are bearing down upon them. There is a sense here and elsewhere that everything might seem to be changing, but the reality for practitioners is that they see little change—the culture is the same. There is a great difference between seeming and seeing.

The big issue that this Bill attempts to address is the culture of our public services in Britain. Its aim is, quite rightly, to create greater diversity in public service provision and to let loose these new emerging enterprising communities by creating flexibility, and that is exactly right. I was at a dinner recently with Sir David Varney, former CEO of Shell, chairman of O2 and HMRC. He has run some very large institutions in his time, both in business and in government. He raised the question of why it was that Governments, regardless of which party is in power, with all their resources, often in reality seem to achieve so little, yet social entrepreneurs and local enterprises seem to achieve so much with just one man and a dog. How can we grab hold of the dog’s tail and shake it? This is the big question—the David and Goliath struggle. When you raise these issues, older and wiser heads than me predictably give weary smiles because they have heard it all before and know how difficult it is in reality to do. That might be so, but someone needs to throw the stone to create the ripples.

The big change that this small Bill must seek to make is that of culture. How do you create an efficient culture within public service delivery and procurement? How can we get more for less? How do we empower, energise and truly engage with communities through our systems of procurement?

I have read the cross-party debate in the other place between Chris White, Hazel Blears, Nick Hurd and others. I do not intend to repeat their points. They are all right, and while there may be minor differences between them, they are struggling with this very important issue, and we must encourage them to continue to do so. I support this Bill because there is ample evidence, which has already been given in the other place, of how broader and more imaginative procurement can pay dividends. I do not propose to add to that evidence in this speech. I am interested in the more practical matter of how we build on and grow the evidence.

While this legislation is important, it will change little by itself, as others have said. Large companies will soon learn how to jump through the additional hoops. For example, an employer can say that it will employ local people, but what does that mean if it is just a local address on an application form? It could easily end up a bit like much of corporate social responsibility, with lots of bright consultants writing reports. Indeed, it could in practice make life yet harder for small businesses that do not understand the game. It does not have to be like this. There are already living examples of imaginative broader procurement processes using current legislation. It is the culture and purpose of the procurement process that is different in these specific situations and we need to make this the rule rather than the exception. The change in legislation can be part of the process, but we are deluding ourselves if we think it is an end in itself.

The last years of my working life are focused on building and extending the work that my colleagues and I have spent nearly 30 years doing, which demonstrates in practice, on the ground, what this debate means, be it through the development of a local street, creating a music and arts festival or the redevelopment of church buildings. We need to identify and champion good examples that challenge the internal logic of government systems. It is in practical projects that we can really understand the issues that the Bill seeks to address. We learn by doing, not by talking.

Procurement tends to be done by staff who are solely tasked with procurement or other financial management tasks. If we want to change procurement processes, we need to change the way procurement works. Procurement staff and those managing them have to understand and buy into the broader goals of the wider vision. This is partly achieved through training, events, publications and having targets that are wider than just financial rewards. However, it is broader than that. It is fundamentally about cultural change in organisations. Procurement is not easy or straightforward, and staff are often running to stand still. They need support if they are seriously to embrace a more nuanced approach, to think a bit laterally and learn different skills. This will take significant investment from somewhere. We are asking staff to embrace not just the letter but the spirit of a new law, and willingly to make their working lives significantly more difficult. If errors are made while they are learning this new approach, will they be praised for clearly experimenting? Innovation means mistakes; you cannot get it all right. However, too often, we are good at the blame game. Those who experiment and challenge redundant processes are often penalised because of the errors they make and what they might cost. This applies equally to the legal teams of public bodies, both in-house and those contracted in. Unless a “yes, you can” attitude is encouraged, little will change in practice.

Passing the legislation is the easy bit. If Ministers are serious, they need to bring together a modest number of public bodies that are committed to this journey and use them as exemplars. In my neck of the woods, the London Borough of Newham, what Sir Robin Wales, the mayor, is doing through his programme of using procurement processes to reduce dependency and create local resilience is a good example. The procurement process that we have just gone through at the Olympic Park Legacy Company for managing the Olympic venues and the Olympic park—here I must declare an interest as a director—is another good example. Soon we will be responsible for building five new villages. What an opportunity for the London mayor, his officers, and central government to learn from the many years of experience that some of us have had of working with local communities around the park. This is a chance seriously to get a grip on what works in practice and build on it. From where I sit, I can confidently say that there is a real appetite for this journey, but it will involve both London and central government seeing this work as a piece of innovation and giving us the space to operate and innovate. There is a long way to go.

Speakers in the other place have given good examples of public sector innovation elsewhere in this country. All these positive examples demonstrate that this is not just about London or party politics but about what works in practice and liberates enterprising people within our communities. I believe that change comes from within. It is not about a top-down or a bottom-up approach; change happens from inside out. The change I describe will happen only if we take in hand the outdated machinery of government and bend it to our will. This is fundamentally a practical task for practitioners and the Government would do well to point to them and celebrate their work. This is a job for the Brunels of this generation—the engineers and entrepreneurs. It is not a task for the faint-hearted or those Guardian readers who, in my experience, are all too content to analyse the world to death and comment from the sidelines through newspaper articles and government reports. Gird your loins for this practical task; it is time that we celebrated practical people.

As this new culture develops, other public authorities can then join the process. I therefore question whether Clause 1(3)(a) should read “may” rather than “must”. I worry that forcing public bodies reluctantly down this path will be counterproductive and that the evidence will therefore be inconclusive at best. Perhaps the legislation could move from “may” to “must” when there is a critical mass of public bodies that have chosen to adopt this approach. This would also mean that we need not include all procurement; purchasing paperclips may not be improved by this process.

Governments of all hues have, in my humble opinion, too often imposed approaches without experimenting with them first. Initial flexibility might result long-term in a more sensible, graduated approach. Change is always easier and more focused with the willing than with 10 pressed men. Culture change depends upon a willingness to embrace change at all levels. However, as I have said, tinkering with the legislation is only part of the wider process of change. Fundamentally, I have learnt that there is a strong correlation between long-lasting change and human relationships. Legislation might oil the wheels of change but it is people who move the wheels forward. These relationships take time to build and public sector procurement needs to make allowance for this. Too often, the length of the contract, particularly for those involved in social change, is too short: many are limited to one year or less.

These relationships are crucial to both the short-term and long-term success of projects. As my colleagues and I began to engage with St Paul’s Way, a dysfunctional street in Tower Hamlets, following serious violence five years ago—here I must declare an interest—I was not surprised to find that basic conversations were not taking place between the housing provider, the local school and the health centre, despite the rhetoric about joined-up thinking at the time. Once these conversations were initiated at all levels of the public sector structures, and relationships cemented, this street was seen literally to transform. We are now about to open a new social enterprise in partnership with some large corporate businesses to explore how we now build on and extend this enterprise culture in a housing estate formerly defined by dependency. It was a privilege to show colleagues from the House some of this work last week.

St Paul’s Way Trust School, formerly a failing school, has just been described by Ofsted as one of the 50 most improving schools in the country. Professor Brian Cox recently became the school’s patron because it now specialises in science. When I described to Brian our organic approach to change, he immediately described how the CERN experiment developed 40 years ago through the relationship of a few scientists who dared to think the unthinkable and do it together. It was very similar. The CERN experiment may well change our thinking about relativity and how we understand our universe. Brian and I, with colleagues, are now exploring how we might bring something of this shared narrative together at a summer science school at St Paul’s Way in July. I would be honoured for colleagues from the House of Lords who are interested to join me at this novel community science school. As scientists, possibly including four Nobel laureates, share the details of their experiments we will share our narrative about a 30-year experiment in community regeneration which has produced clear results. Our shared narratives have an inside-out approach in common that has human relationships at its core. Brian is interested in teaching science in the schools that we work with because he knows that science education is fundamental to the growth of our economy. The inside of one of the UK’s most challenging housing estates is an interesting place to begin.

The set of dysfunctional circumstances I met in St Paul’s Way is not unique. It is the norm. I have seen this waste of public sector investment replicated across the UK in Bradford, Glasgow, Manchester and elsewhere. The sleeping giant is resident there, too, but, unlike St Paul’s Way, we are not awakening it there. We are putting it to sleep. Fundamentally, this is not about new money, but about using limited money in new ways. We need to work with practitioners, enablers and successful entrepreneurs. Go with the stones that roll: with practical people who want to build the change in an organic way, one step at a time. Let us stop thinking policy, strategy and framework, and focus upon people and relationships.

I have two final, practical, points. First, often, joint procurement of integrated services would potentially produce better results. Procurement based on outcomes rather than prescribing the process is often more appropriate. Community Action Network, which I helped to found, developed an approach to using small, local community organisations to deliver contracts called “smart intermediaries”. If there is a will, it is often surprising how a way can be found.

Secondly, in relation to the voluntary and community sector, recent years have given rise to the service level agreement replacing grants. These SLAs are, however, very one-sided. On the one hand, they are effectively a contract. If the contract is not delivered as specified, then payment is withheld, which is reasonable enough. However, unlike a contract, the issuing party—local authorities et cetera—can usually vary the terms, terminate at short notice and pay late, all without penalties. As a result, when financial times get difficult, contracts, which are expensive to cancel, remain, while SLAs get cancelled. A local community group would argue that having a decent contract was a contribution to the social and economic well being of an area, which the Bill seeks to promote. Whether the commissioning body sees it like this is a different matter.

Colleagues in the third sector will know that the Government are serious about these issues when they begin to see these small, practical steps that strengthen their hand. The financial problems we face as a country today are actually a fantastic opportunity. Let us take hold of them with both hands.

My Lords, we have been debating some very substantive Bills in the House recently. When I have gone to pick them up, they have been pretty meaty and weighty. When I picked this one up, I saw how brief it was. Nevertheless, it is very powerful, and we should not let its size in any way detract from what we are trying to achieve. I congratulate the noble, Lord Newby, on bringing the Bill forward. I am pleased to support and endorse it.

I must also declare an interest in that I am the chief executive of the national employment charity Tomorrow's People, and a trustee of New Philanthropy Capital. The House does not need me to reinforce the difficult social and economic conditions that we face; they are sadly all too apparent. However, I will reinforce the timeliness of the Bill and the opportunities that it presents to help improve the social and economic situation that society, communities and individuals face.

First, in any procurement situation there is an undoubted imperative to drive costs down. Whoever delivers public, private or charitable services should all be focused on this. That is beyond question. The opportunity that the Bill gives to us is to give as much credence to social value as to cost; my noble friend Lord Wei articulated this very well. If we do not do this, then we end up knowing the cost of everything and the value of nothing. Experience of this was relevant in the recent issuing of a social impact bond for which, when the application went in, as many points—indeed, if not more—were given to policies and processes as were to cost.

Clause 1(3) states:

“The Authority must consider… how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area, and… how, in conducting the process of procurement, it might act with a view to securing that improvement”.

In other words, procurement is opened up to consider what other value can be brought to the service. To do this, it is important for us to understand what social value is. It is suggested that social value is,

“the additional benefit to the community from a commissioning/procurement process over and above the direct purchasing of goods, services and outcomes”.

Noble Lords must forgive me for using a direct example from my own sphere of work. To get somebody into work is a great thing; keeping them there is the real success. Securing a job is an output; keeping it is an outcome. The additional social value can be quantified in terms of benefit payments saved, tax receipts increased and a reduction in other costs such as health, crime and government administration. I would even go as far as to suggest that there can be multiple social values created by joining up and delivering across more than one sphere of service or contract.

The Bill creates an opportunity for the voluntary sector to play its rightful part in the delivery of public services, and to be taken seriously. This opportunity must only become a reality on the basis of a proven ability to deliver to the standards and outcomes required. It is not what is said, it is what is done. It is not what is promised, it is what is delivered. I am sure that the sector can step up to the mark and meet this challenge.

In many cases, the voluntary sector is having a very difficult time at the moment. The Bill would open up opportunities which would help the sector to develop a sustainable business model. I am not for one minute suggesting that the sector should be given the opportunity as a divine right. You will find that the sector is responsive to the needs of its clients, communities and service users. It is innovative in designing viable, sustainable and deliverable solutions, and flexible in the way that it can respond and adapt to the social issues that society faces. Indeed, the voluntary sector is commercial in its determination to do the best possible job.

If I may, I would like to take a moment to focus on the designation of the voluntary sector, Some call it voluntary; some call it the third sector. I would rather, in the case of this Bill, like to hear it referred to as the not-for-dividend sector. I think that my noble friend referred to the phrase “not for distribution”. There is nothing wrong with making money; it is what we do with it. If the social value were taken into account when contracts were awarded, or even considered, there would be a social as well as a fiscal margin which could be reinvested in the service. The not-for-dividend sector is ready to partner with the private and public sectors to maximise true social value. People in our country are ready to invest in social impact bonds if the social value is added, quantified and taken into account. In achieving social value, quality must not be compromised.

In summary, I hope that the Bill will open up markets and revenue streams, increase choice for individuals and encourage, support and deliver job creation, particularly for those who live on the margins of society. When Lend Lease built the Bluewater shopping development, there was a great fear that people would just transfer from Lakeside to take the jobs. In fact, the local authority and others worked together to put out a tender to make sure that local people got those jobs. As a result of that, 1,200 local people got jobs in Bluewater who probably would not have done so otherwise. I would like to do the sums and add up the savings in benefit and other savings that were made and the tax receipts that were gained from that. I also hope that the Bill will engender collaboration between the business sector and the public sector and generate margins for reinvestment which will further the cause of social value. However, there will be challenges; for example, in regard to working capital and measuring and demonstrating social impact. The sector and others will have to concentrate on maturing the way in which they collect data and prove their ability. I pay tribute to Pro Bono Economics, which provides its services to organisations free of charge so that they can play their rightful part in this area.

In a time when we see many challenges and difficulties, the Bill would certainly go some way to creating opportunity and hope for the people we are all in business to serve. I fully support the Bill and hope that it makes speedy progress.

My Lords, when your name appears towards the end of a speakers list, it is not unusual to discover that everything you wanted to say has already been said, often more eloquently than you could have done. Therefore, I shall not detain your Lordships' House for long.

This is one of those Bills where you ask yourself why on earth it has not been introduced earlier. Then you have a look and think that there was nothing to stop it being introduced earlier; so why has that not been done? The simple reason is that, until now, this subject was considered as something that was jolly good but which should be tagged on to something else. I think that the noble Lord, Lord Mawson, touched on that when he spoke about corporate responsibility in relation to many big firms. Indeed, we have all seen projects of varying quality and heard the associated razzmatazz about corporate responsibility. However, corporate responsibility has not been an essential part of the services we are discussing and the concept has not been open to challenge prior to the introduction of the Bill. I hope that the concept is also applied to non-traditional, first-choice suppliers; when you come out with an expression like that without thinking about it, you wonder whether you have been here too long. Such suppliers could offer models of best practice that may be absorbed by bigger groups.

Whenever you have a good idea and it is purloined by somebody else, you always cry foul, but as long as action is taken that is a good thing. I hope that the Bill, which is a short measure when compared with the huge Bills that we have discussed over the past few months, will help to start a process. Following the enactment of other good small pieces of legislation, battles have commenced in terms of enforcement, monitoring and making sure that people take them seriously. The Bill constitutes a good idea that has been given a few teeth. Whether those teeth are sharp enough, or the jaw that contains them is strong enough, we do not yet know. However, the Bill is a good start. We should see it as part of an ongoing process as opposed to an end in itself. Nevertheless, it is valuable.

My Lords, it is a great pleasure to be speaking from these Benches in support of the Bill. I should begin by declaring my interests and relevant experience, first, as honorary secretary of the All-Party Parliamentary Group on Social Enterprise, under the wise chairmanship of the noble Lord, Lord Newby. I am also an ambassador to sporta, the trade body for the many leisure and sports trusts that have already been referred to in the debate. I am, of course, a lifelong co-operator—I am Labour and Co-operative. I was founding chair of Social Enterprise UK and for many years served on the board of Social Enterprise London. I was a trustee of Jamie Oliver’s Fifteen foundation and Training for Life, and I am now a patron of the Manningham Mills Community Centre—of which I am particularly proud, given that I am Baroness Thornton of Manningham. The centre is opposite the infant and junior school that I attended.

I agree with the noble Lord, Lord Addington, that at this stage of the Second Reading debate just about everything that can be said in support of the Bill has been said. However, it is important that from these Benches we record how grateful we are to Mr Chris White MP for choosing this subject following the Private Members’ Bills ballot. I confess that it puzzled me as to why and how a Bill that started life as a Bill for social enterprise now makes no mention of it at all. Indeed, two of its major aims were dropped. That presented some of us with a problem—having called it the “Social Enterprise Bill” for a large part of its life, we have had to rename it. As someone who has been working with social enterprises for many years, I went to find out what people thought about the fact that two parts of the Bill had been amended by the removal of provisions for a national social enterprise strategy and a duty on local authorities to engage with social enterprises.

I shall make one or two points about that. The first is that we should not lose sight of those aims and objectives and there is no reason at all why, nationally and locally, they cannot be done anyway. It is worth quoting what Mr White said about this. He stated:

“The social value section was the most important section of the bill. It is important that social value is included in as many contracts as possible. My bill is aimed at practically supporting socially responsible business practices. This is a step on a journey and I believe that the sector should be commended for taking a long term view of the benefits of this bill and not taking the view of ‘all or nothing’”.

We have indeed been on a journey in this sector for many years. I read with interest what Allison Ogden-Newton, the chief executive of Social Enterprise London, had to say about this issue because, like me, she was struggling with the idea of what one should call the Bill. She took, as she would have done, soundings among social enterprises in the London area. June O’Sullivan of the London Early Years Foundation wisely said that what she would like from the legislation was anything that removed procurement barriers such as a mandatory £20 million turnover to tender. She added that,

“getting the concept of social value into their”

—local authority—

“heads wouldn’t hurt”.

Amen to that. Mark Sesnan, the director of GLL, which manages 100 leisure facilities across the country and has one of the Olympic legacy contracts, said:

“Having social enterprise in there was powerful, but removing it is not terminal. We welcomed the bill because it asked for government to look for more than just price in contracts. If it still does that then that’s great, continuing to describe such activity as social enterprise would have been the icing on the cake”.

My noble friend Lady Hayter was right, as ever, when she said that we need to get a move on with the Bill because it is a progressive measure that we would like to see on the statute book before the end of the Session. We on these Benches will do nothing to hinder that process and we will be happy to do anything to help the Bill’s progress.

I have been supporting co-operatives, mutuals, social enterprises and voluntary organisations all my life—from joining the Bradford Co-op when I was 16 years old to helping to steer through this House legislation on the right to request in the NHS, as well as legislation on industrial and provident societies, charities and companies. I should like to draw attention to two examples of organisations where contracting and working with local government and the health service really works.

The first such organisation is just across the river. The Blackfriars Settlement, which many noble Lords will know, is a small community-based organisation that is surviving against all the odds. Its Art2Print social enterprise employs people with mental health problems and trains them in design and print. It is a partnership of funding from local authorities and money that the Blackfriars Settlement organises. It is doing a good job of building local print and design services for other local community groups and, more importantly, getting people who have had serious mental health problems back on the employment pathway.

Secondly, I mention my home town of Bradford, which has many social enterprises, many of which go back for many years. The Lighthouse Group in Bradford provides support for children and young people who have fallen out of the education system, and Urban Biz, which was formed in Bradford, is aimed at marginalised and disadvantaged groups, particularly those from African or African-Caribbean roots. Both those organisations depend on local government contracts and bodies such as the late, lamented Yorkshire Forward. Both are struggling at the moment, but offer the kind of value to their local communities that we have been discussing today.

All those bodies welcome and support the Bill, as do we. As I said, we will do anything we can to progress the Bill and add it to the legislative and policy framework that is helping to create a larger and more powerful sector in our economy for social businesses and businesses that add enormous social value.

My Lords, I am delighted to speak on behalf of the Government to support this small but significant Bill. We support it because it contributes to the ambitions of the coalition Government—which, after all, are not fundamentally different from those of our predecessor Government—to reform public services by ensuring that they achieve optimum value and promote economic growth, as well as strengthen relationships with communities.

The Bill requires relevant authorities to consider how to improve the social, environmental and economic impact of public service contracts at the pre-procurement stage. As noble Lords have noted, it requires commissioners to consider consulting on public services, thereby empowering communities to play a more active role in shaping them. It ensures that commissioners consider the full impact of services on the people they serve, and it will enable them to maximise the social, environmental and economic impact of public money. It does not change procurement law but sits within the existing procurement process. It does not undermine the requirement to award the contract to the most economically advantageous tender, nor is it at odds with the Government's value-for-money agenda and efficiency reforms, and by considering the full impact of a service it reinforces obtaining value for money in procurement and should help to improve the quality and efficiency of public services.

Several noble Lords noted that we are really talking about a long-term culture change and that we still face considerable obstacles in changing that culture. As I sit in the House listening to noble Lords talking about their commitment to localism but insisting that ring-fencing should be maintained on one subject or another—that the Secretary of State should retain full responsibility for the provision of public services and that Whitehall should intervene—I am conscious that we have not ourselves entirely gone through that culture change. As the noble Lord, Lord Wei, remarked, the Bill provides a nudge in that direction. Perhaps we need to recognise that some of us still need to be nudged. The noble Lord, Lord Mawson, remarked that regulation and form-filling still stifle innovation in this area. Centralisation is part of that, as we all know. All noble Lords will be familiar with Unshackling Good Neighbours, the report last year of the noble Lord, Lord Hodgson of Astley Abbotts, which attempted to tackle that in a number of ways, but we all recognise that we need a major culture change in this area.

After all, many of the public services with which government in any shape is concerned can succeed only if they are embedded in the local community. Bringing vulnerable people back within the links of a strong community is a necessary part of effective delivery. In probation and rehabilitation, for example, one group I have been involved with recently in Yorkshire is Together Women, with which the noble Baroness, Lady Thornton, may well be familiar. It is concerned with preventing young women being caught up in reoffending. It can and does save the public purse an enormous amount of money. It demonstrates that keeping people from being caught up in the prison process again is proving to be a considerable saving. That has not been easy to demonstrate. Indeed, I have been lobbying on their behalf to make sure that the Government fully understand the extent to which these unavoidably local bodies—they have to work with local people—provide help.

Mental health support and recovery, as a number of others have mentioned, is a similar activity. I was at the Bradford mental health re-employment awards lunch last Friday. The noble Baroness will be familiar with the Cellar project and a number of the other bodies that are working in that area. There are social enterprises raising money from their activities to fund what they do in partnership with local authorities. Similarly, many groups are already operating in care for the elderly. One needs to ensure when the government outsources activities that the vulnerable people are involved in their local communities. One of the examples pointed out to me is that if meals on wheels are provided by the elderly being brought into a local community centre to be fed, they can mix with each other, it is much easier to work with them and they are back to being involved in the community. That can contribute considerably to their continuing health. There is therefore the integration of service provision at the local level.

Close co-operation among different service providers on the ground can also improve effectiveness. My noble friend Lady Scott and I were extremely happy to be shown round the Bromley by Bow Centre by the noble Lord, Lord Mawson, last week in which the health and housing advice centres have a common counter. People who go to talk about particular health concerns may often be concerned about bad housing, which can be dealt with at the same time. The noble Baroness, Lady Stedman-Scott, also underlined the advantage of linking up across the different deliveries of local public services. I know very well from some of the issues that we have in Saltaire, which is not a problem village, that sometimes you have to deal with one bit of bureaucracy that says that something cannot be done and another bit of bureaucracy that says it has to be done. One has to lobby hard against that.

The Bill is a first step. It is part of a long-term process in an attempt to change the way in which government manages public services and co-operates with the not-for-profit or not-for-dividend sector. Where might we move on from here? The Government are now concerned with simplifying the procurement landscape and building the capability of commissioners and those concerned with procurement. We are considering ways in which larger contracts can be broken up into smaller lots where appropriate, and we are also planning a commissioning and procurement academy as a way of equipping commissioners and procurement authorities with the right skills and raising capacity. We are also hoping—this point was raised by the noble Baroness, Lady Stedman-Scott—to accelerate the measurement of impact. There are a number of ways in which we are concerned to improve the way in which to measure and collect data. We need to increase access to measurement tools and systems and the data that people need.

The legislation does not explicitly favour the involvement of social enterprises or any other particular form of provider in public service delivery. However, its focus on maximising social, environmental and economic value will inevitably ensure that the full contribution of organisations with a social or environmental purpose is recognised. Social enterprises are the prime example of such organisations. The current pressure on all parts of government to make spending cuts is particularly important to ensure that the full value of organisations is recognised. Consultation may clarify social and environmental aspects of the service, which will then be reflected in the specification. Effective consultation can also lead to fewer bureaucratic procurement processes—which is much to be hoped for—and a greater range of suppliers responding, which in turn will drive value for money.

On behalf of the Government, I welcome the Bill. I know that the House agrees that it is a useful and important step in the long-term process of transforming procurement in the public sector and enhancing our work to build what the coalition Government call the big society, what Liberal Democrats call the responsible society and what others call community engagement, active citizenship or local self-government. Whatever we call it, I hope that all parties share the same objective, and I hope that the Bill will help to push us further in that direction.

My Lords, I thank all noble Lords who spoke in the debate. I am extremely pleased to get such support from all sides of the House. The debate demonstrated the degree of experience and expertise on the subject in your Lordships' House, and a deep, common-sense approach to difficult issues. Rather than looking at principles, we look at how things work on the ground. There is widespread acceptance that the Bill will not transform the world, but will play a part in doing so. As the noble Baroness, Lady Thornton, said, it is a step on the journey. As the noble Lord, Lord Wallace, said, it is a long-term process. As the noble Lord, Lord Mawson, among others, said, we are trying to effect a culture change, which one piece of legislation can only partially do.

It is one of the attractions of your Lordships' House that one normally leaves a debate with one or two new ideas or phrases ringing in one's mind. I will take away two from today. The first is the idea of the noble Baroness, Lady Stedman-Scott, that we are talking not about not-for-profit enterprises but about not-for-dividend ones. We want social enterprises, and they have to be profitable. If they are not, they are not enterprises and they will not be around for very long. The phrase “not for dividend” is not used often enough to segregate this sector from the rest of the entrepreneurial environment. My quotation of the day is from the noble Lord, Lord Mawson, who asked us all to become the Brunels of this generation. I had never thought of myself or my colleagues in those terms, but it is a comparison to which we should all now aspire. With that, I request that the House give the Bill a Second Reading.

Bill read a second time and committed to a Committee of the Whole House.