Matthew's RSA blog

Is the voluntary sector immune to producer capture?

Is the voluntary sector immune to producer capture? I thought about this question when reading the other day the views of veteran film maker Ken Loach. The director of Kes, Raining Stones and countless other powerful pieces of social realism, was urging people not to donate to the homelessness charity Shelter while it was in conflict with its own employees over plans which may worsen the terms and conditions of some of the charity’s staff. In defending the action of Shelter management, its chief executive, Adam Sampson (a recent speaker at RSA), said 'People give us money not to benefit our staff but to benefit those we were set up to serve - the poor, the vulnerable, the homeless - and my moral and legal duty is to use that money as efficiently as possible’.

‘Producer capture’ is one of the key concepts imported by New Labour from the nostrums of neo-liberal economics. It describes the process whereby the goals of an organisation reflect the interests and prejudices of its employees (the producers) rather than those it is supposed to serve (the consumers, customers or citizens). More precisely, given that workers in a customer-friendly organisation will see their own interests served by serving the customer, capture is evident when producer interests are not aligned with those of the consumer and it is the former that predominate.

New Labour reformers in large part accepted the neo-liberal charge that public services – sheltered from the disciplines of competition or profit – were prone to producer capture. This insight contributed to some of New Labour’s most important public service reforms. It also legitimised rhetoric critical of public employees. This rhetoric (remember the ‘scars on my back’?) also contributed to the public service morale problems which have plagued this Government despite extra investment and higher public sector pay.

I am often asked to speak on issues relating to that nebulous concept ‘the third sector’. With all the major parties taking every opportunity to sing the praises of, and make more promises to, the third sector I feel honour-bound to challenge the consensus, arguing that the voluntary sector is as prone to producer capture as the public sector.

If you were to plot the sectors as lines on an axis of producer capture, I suspect the voluntary sector would be the longest. In other words the third sector contains both the least producer captured and the most producer captured organisations. The former would include small community based groups run on a shoestring by low paid employees and volunteers while the latter might include (naming no names) well-heeled high status NGOs that have managed to make themselves almost immune to any tough questioning about the actual impact of their work. A trustee of one of these organisations recently described to me spending a whole day being shown round its offices before eventually bursting out in exasperation ‘the offices are great, the staff lovely but when am I actually going to meet a client?’.

If this was an essay not a blog post I could spend more time exploring producer capture in each sector. It is, for example, a difficult concept to apply to the private sector. Last week many people were outraged at the profits of energy companies at a time of rising prices and fuel poverty. But many of us complaining are also shareholders in these same companies through our pensions funds, life insurance or savings. So where does the producer interest lie? This is, by the way, one of the issues we will be exploring in our Tomorrow’s Investor project (for which we’d love another sponsor or two!).

For now let me end with a plea to avoid ‘sectorism’. The private, public and voluntary sectors are different in systematic ways, but it is more obfuscating than illuminating to ascribe any characteristics, including producer capture, to a sector as whole. 

Only one problem ....

I spent the weekend on a very intensive personal development course. It was challenging and ultimately inspiring. I am making lots of changes in the way I think and act as a consequence (email me if you want to know more about the course).

So, I was already in a slightly strange place when I arrived to chair an all-day conference hosted jointly by the Department for Communities and Local Government and the Office of the Third Sector. The conference of local authorities and third sector groups had been organised around the announcement of Government’s plans for what are called ‘community anchors’ (cross cutting, community based third sector organisations). Only one problem.  The night before the conference, ministers had pulled the announcement. So there we were, 200 people, including two ministers, to discuss the implementation of a plan that had been shelved! As it turned out the conference was fine, and I suspect many of the ideas that came out of it will be reflected in the plan when it does finally see the light of day.

The plan was pulled because of an unresolved argument about whether central government could specifically earmark the community anchor funds or should devolve the money to local authorities merely with guidance as to how it should be spent. However this argument is resolved, it does at least show the Government is taking seriously its commitment to reduce the funding constraints and targets it imposes on localities. Ministers, interest groups, and commentators tend to speak with forked tongue on devolving power. We attack the Government for centralisation but then protest either at ‘postcode lotteries’ or when money that has previously been earmarked for a particular policy or scheme we favour is made subject to local discretion.

This week saw us recruit our 27,000th Fellow. This is fantastic news and mainly down to the hard work of our brilliant fellowship team. We are also recruiting more Fellows through the recommendation of existing FRSAs so let me also thank all of you who have helped us reach this milestone. Onwards to 28,000!

Am I on to anything here?

A quick and random thought.

In my office every day I hear two very different views of the world.

On the one side is the world of technology, creativity, social enterprise, and philanthropy.

So much that is exciting is happening at the intersection of business, particularly new business, and social action.

Technology companies, internet billionaires, hedge fund tycoons, ex-presidents and vice-presidents seem to be striding the world setting up new foundations, creating networks, exploring new ways of engaging people in issues like climate change, conflict resolution and African poverty.

The pace of change in our society and the creativity of young people as the drivers of this change are breathtaking.

To hear all this it can surely only be a matter of time before a new and better world emerges...

And yet look at the other axis - between state and citizen, or between different states.

Here the big problems seem stuck or getting worse; disengagement, poverty, climate change, conflict.

In ten minutes before I dash of to the annual dinner of the RSA in Yorkshire I have no idea how to even think about this disconnect.

Is it that all the technology and big business billions are just drops in the ocean?

Is technological innovation really more about making money and pandering to shallow individualism than making the world a better place?

Is it that the state (like many large corporations) and international institutions are simply incapable of operating effectively in today's complex fast moving world?

The biggest challenges we face can only be met with the right interventions from the state - locally, nationally and internationally - but much of the dynamism in the world (the ideas, the technology, the people) is taking place well away from the formal sites of political authority.

Am I on to anything here?

And should the RSA be trying to find ways of thinking about and overcoming this disconnect?

Beyond the third sector

I was great fan of the Eurostar until last Friday. I was among the people stranded in Paris when it was cancelled due to a fire near the line in Wandsworth. Eventually I got home via Calais and Dover but the people I felt sorry for were the young couples - lots of tearful faces - crestfallen at their plans being kyboshed.

The fire wasn't Eurostar's fault and no business is going to fold because a meeting gets cancelled, but maybe for the Friday journeys in particular they should go out of their way to offer an alternative route for those with their hearts set on a romantic weekend away.

I was in Paris as the 'keynote' (flattery will get you everywhere) speaker at the launch of EUCLID the first pan European network dedicated to third sector leaders. I told them there are powerful ideological, organisational and social reasons why the third sector is being so heavily courted by the political establishment in the UK and some other countries.

The ideological opportunity is presented by the emerging consensus formed by a right of centre that no longer thinks markets and individualism is sufficient to solve social and environmental problems, and a thinking left of centre seeing diversity of supply as a good way to bring innovation into public services.

The organisational opportunity comes from a recognition of the problems of communication, motivation and engagement in large bureaucratic organisations. The more devolved, ethically driven, diverse third sector seems to offer a better way to connect with people and provide services.

The social opportunity lies in a growing awareness that many of the most pressing problems we face are not amenable to answers which treat people as objects. Instead citizens must be the active subjects developing their own individual and collective solutions. As third sector organisations are generally created from the citizen up they seem more suited to this new way of thinking.

But with each opportunity comes a set of issues to be confronted. It is great that every political party wants to hug the third sector, but one of the important aspects of its role is advocacy, which sometimes needs to be outspoken and controversial. There is no inherent reason why charities can't combine service delivery with advocacy but they need to think through the dilemmas posed.

Two issues are raised by the idea that third sector organisations are better suited to delivering certain social outcomes.

First, are they? I must admit to having sat through too many dispiriting and failed attempts to demonstrate that there is something about, say, a social enterprise - that makes it more responsive, dependable or innovative.

Second, if third sector organisations do grow they have to make sure they don’t simply become inflexible bureaucracies themselves. All large third sector organisations should have a copy of the last page of Animal Farm on their office wall.

Finally, the sector should see the social argument about needing to engage people more ambitiously and directly as a starting point for a wider debate. To develop what I have called a citizen-centric (rather then Government-centric) model of social change means reform beyond the third sector. It requires a rounded model of citizenship involving entitlements and expectations, a more participative democracy and radically new ways of working for the state.

Avoiding the temptation of self congratulation, the third sector should be at the forefront of this debate showing it is as driven by high ideals as by winning the next contract or spot on the Today programme.

So, there you have it. On the plus side you’ve avoided the fifteen minutes speech and read the argument in two minutes (which as readers of his Observer column know, will be a relief to my newest fan Henry Porter). On the down side you didn't get the nice buffet, the lovely walk through Paris and the evocative pleasure of a windswept, deserted night ferry to Dover.