Tuesday, November 28, 2006

Not Even Wrong

Did anyone else read Oliver Letwin's article in the Sunday Times? He was commenting on the fact that the number of people on 40% of the median income has risen under Labour and explaining what the Tories would do.

The reason for this rise in relative poverty under this definition is that under Labour a combination of the strong economy and targeted state action has benefited many children and pensioners, meaning that they are no longer living in poverty, but other groups of people, particularly single adults on benefits and asylum-seekers, refugees and migrants, have fallen even further behind the average earner.

The Tory idea is that instead of the state taking action to help people out of poverty, social enterprises and voluntary organisations should help people in poverty, kind of like in the nineteenth century. Leave aside, for one moment, the fact that the Tories in local government are currently merrily cutting financial support for these kind of organisations, advice centres which help people with, for example, problems with debt in Oxford are just the latest example.

The particular question Oliver Letwin is interested in is how to stop risk-averse bureaucracy from making social enterprises fail. Apparently, a cause of poverty is monitoring organisations which the government gives money to "with bulwarks of procedure, forms and monitoring that will reduce risk". Instead, Letwin wants civil servants to be able to say, "I have been specifically commanded by Her Majesty’s Government to tell you that a significant amount of failure was anticipated, that if no failure had occurred this would have indicated that too little risk was being taken, and that what matters to HMG is not whether there are failures but whether local communities and locally based social enterprises are obtaining a high number of sustainable successes in lifting people out of traps of multiple deprivation.”

If this represents an actual policy idea, what it means is giving a lot more money to small organisations, and then not checking what they spend their money on, expecting a significant amount of it to be wasted. At the same time, government programmes which have helped people out of poverty, such as tax credits, would be slashed or abolished.

I was at a social enterprise yesterday which has been extremely successful in helping young people into work and making sure that they are able to stay in work and learn new skills. There would be scope to increase its funding and increase the range of its work. But social enterprises currently deal with a relatively small number of people, and certainly don't have the capacity to provide tailored help to all people living on 40% or below of the median income.

Even with the monitoring that goes on at the moment, a sizeable amount of the funding for the voluntary sector goes to organisations which are not very effective, or which do not have any capacity to expand, a point which people involved in this group made forcefully, with plenty of examples of money from the Capital of Culture or the council going to fund failing or ineffective projects. The idea that the way to reduce poverty is to cut back on what the state does, and instead expect social enterprises and voluntary sector organisations to fill the gap while not even bothering to check what they are spending their money on and expecting many of them to fail, is so feeble that it is not even wrong.

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