Much to the dismay of my colleagues who have actually to deliver events and projects, I occasionally develop a hunch that the RSA should develop an interest in a debate raging somewhere in the wider world. The current hunch focuses on enterprise and governance.
My interest was prompted by two events last week. First, I chaired a dinner with Cabinet Office Minister of State, Francis Maude. The Minister’s enthusiasm for the minutiae of efficiency savings is commendable and his stock of stories about Whitehall profligacy reminded me of what a disaster it was when Gordon Brown blocked Tony Blair’s attempt – near the end of his Premiership - to undertake a proper review of the scope to reduce public spending. But Maude was even more enthusiastic about floating off parts of the public sector as mutuals. He has great hopes for the work of Julian Le Grand, who is chairing the Cabinet Office mutual task force.
Then on Friday I met someone from the Community Interest Company Association. Many people are dismissive of CICs saying that too few have been created since the status was created in 2005 and that the rules for CICs are too restrictive in some areas and too lax in others. Yet, thousands of CICs have been established, some are quite large businesses and, as they evolve, new ways of combining this governance form with incentives for entrepreneurship and growth are being developed.
There is a lively if somewhat nerdish debate between the advocates of mutuals, co-ops and CICs and also those who say that mission, goal and impact matter more than governance so there is no reason why social enterprises can’t have a conventional ownership model.
My own take on this – which may only go to reveal my ignorance – starts from the question: what is the overall objective of new forms of enterprise? There seem to be three sets of motivations:
Political: for a Government seeking to break up the state, ‘mutualism’ is more politically palatable as an alternative to state ownership than privatisation.
Fitness for purpose: certain governance forms are better suited to certain forms of activity. For example, the asset lock on CICs ensures that those who donate to, or invest in, CICs can be sure the benefits will go to the intended recipients. Both Maude and Le Grand argue that mutuals are a good way of balancing public interest with the need to motivate and reward staff.
Pluralism: (for me the most important argument but also the one I hear least often). There are major problems with the predominant forms of capitalist ownership and governance. If companies are owned privately or taken over by an investment fund, all the power is concentrated in a few pairs of hands. If they are listed companies owned by many different funds, investing on behalf of millions of people, there is a stewardship deficit (an issue which Vince Cable is trying to address today in relation to executive remuneration). In addition to their specific virtues, promoting mutuals, co-ops and CICs is part of trying to create greater pluralism in the capitalist economy.
But before I ask my hard pressed colleagues to work up proposals for an RSA debate is my summary of the issues right? And could anything useful come out of a debate which explores the relationship between wider socio-economic objectives and the specific forms of ownership and governance that should be encouraged?
Asheem Singh Mark Hall
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