As some readers will be aware, many of the UK’s charities and social enterprises are currently pretty cheesed off with the support on offer from the government in response to the global public health crisis.
It’s certainly annoying that charities and many social enterprises are unable to access the £10,000 grants available to small businesses – not for any specific impact, just to generally support their continued existence – because these grants are being administered via the business rates scheme. In the case of my organisation, this would amount to around 5% of our annual turnover.
But this annoyance is nothing compared to the mixture of anger, confusion and disbelief that many social organisations feel about the government’s ‘furlough’ programme – otherwise known as the Coronavirus Job Retention Scheme.
Under this scheme the state will pay 80% of employees’ wages and related costs (yay!) on the condition that they don’t do any work (oh, shit). In our case we have the opportunity to receive £9924 per month in public money if our staff do nothing, while receiving £0 if we continue to publish community newspapers providing vital public information to our local communities – an activity a cabinet minister recently described as ‘vital’.
They go furlough, we go hire each other
Of course, ministers and civil servants are reacting quickly to a massive problem under a huge amount of pressure and it’s not surprising that the initiatives they’ve created are not perfect to begin with. However, in this case, despite being repeatedly informed of the problem for several weeks, no moves have been made to resolve it.
Instead, with furloughed employees allowed to ‘volunteer’ for organisations other than their own, the situation has reached a position that defies location on the tragic/funny/stupid continuum as charites are being forced to consider schemes to swap their furloughed staff.
Her Majesty’s Treasury has so far failed to explain their reasoning and we know that it’s possible to create a job retention scheme that enables employees to keep working (if they want to and are able to) because the Australian government has done it. While Australian social sector leaders have requested improvements, the current offer is a staggeringly better deal for charities and social enterprises than what’s available in the UK.
Go big or go down the route pursued by most businesspeople
While the UK government’s furlough scheme is not an actively bad intervention – quite the opposite, it’s an honourable attempt to safeguard people’s jobs that works well for many companies – it is rooted in a flawed understanding of how business works, at least at a micro level.
Charities and social enterprises are caught at the sharpest point of the sharp end of this problem but the idea that business people are only interested in carrying out business activities because those activities lead to the generation of profit is profoundly mistaken.
Very few people start businesses – structurally ‘for profit’ or otherwise – with the intention of becoming multi-millionaires by floating their company on the stock market. In 2013, even in a country where venture capitalists (VCs) are treated like heroes, 1 in every 2000 US businesses was raising finance from VCs to pursue the dream of an IPO.
There are wider questions about the possibilities for other types of larger business pursuing ‘shared value’ or even ‘profit with purpose’ but, at a basic level, everyday experience suggests that the average business is not the greed machine you read about in the economics textbooks.
Most of us know plenty of people who run their small businesses because they enjoy doing the activity that the business carries out, and like to be both appreciated by their customers and respected by their friends and family because they provide a good service. This is also true of many people who work for small (and larger) businesses.
Profits are important – businesses obviously can’t lose money on an ongoing basis – but for large numbers of people they’re not the reason why they get out of bed in the morning.
So while the UK’s government furlough scheme is perfect for bars, restaurants and theatres that have literally to shut, it’s not such a great fit for businesspeople – whether they’re greengrocers, yoga teachers or gardeners – who are both willing and able to carry on providing some services to people who’d like them while observing social distancing but find these activities are no longer profitable*.
Ultimately the scheme is based on the premise that the only two kinds of business activities are: (i) activities that generate profits and (ii) activities that should not happen.
Ironically, in recent times the prominent UK politician most closely associated with this utterly stupid idea has been the recently departed Labour Party leader, Jeremy ‘Jez’ Corbyn.
Here he is just a few weeks ago lambasting private hospitals for charging the government for beds they are providing to support NHS treatment during the Covid.
“It’s disgraceful that private healthcare companies are making a profit out of the coronavirus” he storms. Before adding: “The beds should be used by the NHS. Rent free.”
Maybe it’s too late to raise this issue now we’re beyond the point where he was putting himself forward as the right man to RUN THE ACTUAL FUCKING COUNTRY but y’know Jez, profits are the money that businesses get paid over and above the cost of providing the service.
What do you think, Jez, some of the costs involved in providing a hospital bed might actually be and – showing your workings – could you talk us through how you have arrived at the position that £300 a bed represents profiteering? It’s probably best to just let him go back to the allotment and forget about it all.
This is one of those – not entirely unusual situations – where the only people who believe a theoretical position to be the practical reality are its strongest advocates and its strongest opponents. Both right-wing libertarians and left-wing anti-capitalists believe business is all about (delete as appropriate) heroic/evil business people making loads of money and in doing so either (a) creating wonderful dynamic economies or (b) exploiting ‘the 99%’ and making our lives as bad as possible in the process.
Who let the dogma out?
The actions of Chancellor Rishi Sunak in recent weeks suggest it is highly unlikely that he is a dogmatic right-wing libertarian in practice – but that ingrained dogma about the role of business is currently distorting the meaningful details of interventions that are fundamentally honourable and pragmatic.
Economic dogma – to some extent enshrined in law – says that businesses are vehicles for profit when the practical reality is that they’re vehicles for action. People, and groups of people, form businesses to do things. Making some money, by whatever means happen to be available, is one of those things but does anyone, in real life, really believe it’s the most important one for most people?
The reason why charities and social enterprises are the organisations most painfully skewered by this (probably) inadvertent ideological failure is that, for many of us, what is being done is ultimately more important than how it’s paid for. We openly and unashamedly exist in the interests of social action. While many of us ordinarily use 100% commercial models to support that action – it is the action that matters.
At Social Spider, we publish independent community newspapers funded by advertising income because communities need independent local news. We love our advertisers and we’re proud to help local people find out about their products and services as part of our model – but we would have no interest in publishing newspapers that included all (or mostly) advertising and no community news. This would be pointless. For us, during the Covid crisis, our ability to generate income through advertising has collapsed but our ability to carry out social action would be the same (if we were allowed to pay our team to do it).
The situation for charities is even more ludicrously obvious. If a charity has lost the means to hold fundraising to generate income to support homeless people, this has no impact whatsoever on whether the work which would have been funded continues to exist.
While the UK government’s decision that businesses and jobs should be protected was clearly taken to safeguard the future of the economy, it also seemingly reflected a desire on the part of the ministers to prioritise the needs of citizens over and above conventional economic theory.
Sadly, though, that conventional worldview is so deeply embedded that, as things stand, it is leading to the good intentions being thwarted.
Whatever ultimately happens in terms of the government’s response to Covid, the Treasury’s rigidity on this issue exposes how inadequately it is prepared for a world where motives for commercial activity are necessarily becoming more complex – alongside a more urgent need to actively recognise complexities that have always existed but have too often been ignored.
Battles for resources are not going away – but they’re going to play out in very different ways. The nature of work is changing and, as Kate Raworth and others have pointed out, it is no longer credible for the concept of economic success to be detached from environmental and social sustainability.
At a basic level, it’s vitally important that we as charities and social enterprises fight hard for our specific needs and the right to stand with and support our communities through the Covid crisis – but it’s equally important that we see this challenge as an opportunity to make the case for a different approach to the economy as a whole: based on an understanding of life in all its messiness.