Speech to the ACEVO Conference, London, 12th June 2008.

Barely a week goes by without the voluntary sector being courted by one or other of the main political parties.  Gordon Brown, David Cameron and Nick Clegg all want to be your partner.  At one level the attraction is obvious.  In communities up and down the country third sector organisations are making a huge difference to people’s lives. 

In my own constituency the most inspiring people I meet are invariably those like Abigail Atkinson from Darlington YMCA, Paul Greenwood from the Talking Newspaper or Joyce Standing from the Park East Community Partnership who run and lead community and residents organisations.  At the other end of the spectrum organisations like Barnardos, Turning Point and NCH deliver public services on a national scale and do so professionally and efficiently.  You play a growing role in precisely those areas of activity that government often finds most difficult – whether that is community engagement and carers support, care of the dying or help for those addicted to drugs.  And over recent years the sector has expanded considerably both in size and in scope in part thanks to a doubling in funding from central and local government.

So there are sound practical reasons for the growing political interest in the voluntary sector.  But I think the real explanation is more fundamental.   You epitomise a new approach that is now emerging about how best to meet the challenges of the modern world.  In the last decade as a nation we have made good progress in reducing poverty, improving services and creating jobs.  A decade ago those were the principal challenges we as a country faced.  Today there is, of course, more to do on each of those fronts.  But in addition there are new challenges to meet.  Not just the policy challenges of global warming and global terror, of demographic change and entrenched inequality.   But the more fundamental challenge of responding to more globalised economies, more diverse societies and more assertive citizens in a way that secures greater and not fewer opportunities for people.

In this new world faced with these new challenges the old top down approach to governance will no longer work.  It is not just that the public have reached the limits of what they will pay in taxes, although they have.  People in low and middle income families are under pressure and feeling the pinch.  So inevitably public spending growth in the period ahead will be lower than in the period just gone.  But it is also that, just as the global credit crunch and its consequences have exposed the limits of untrammelled free markets, so the entrenched problems of social exclusion in so many communities and unfulfilled potential among so many of our citizens expose the limits of centralised State action.  What made for progress in the past will not secure progress in the future.  What is now needed is a new approach in which doing things with people rather than to them becomes the key to unlocking progress – whether that is improving health, fighting crime, regenerating neighbourhoods or protecting the environment.  And it is here above all else that the strengths of voluntary and community organisations lie.
 
The key political battleground for this next decade is over which party is most capable of redefining the relationship between the State and the citizen.  All three main political parties are toying with the notion of moving power from the State to the citizen but as yet they are doing so without the conviction or coherence that is needed.  Nick Clegg wants a “People’s NHS” to realign his party as less big state and more individual citizen but many in his Liberal Party oppose such talk.  David Cameron talks of “shifting power from the State” but most charities lack the capacity to substitute for public bodies.  And while it is welcome that Gordon Brown embraces “a new politics that places power…in the hands of people themselves” a splurge of Whitehall initiatives seem to point in the opposite direction.  This half-in, half-out approach won’t work.  Uncertainty has to make way for clarity.  It is time to complete the post-war journey, from Atleeism through Thatcherism to Blairism, from the State being in charge to the State empowering the citizen to be in charge – from “they control” to “we control”.  This is where your opportunity lies.  You can both benefit from this new approach and help create it.

There are three principal reasons – at least from the point of view of progressive politics – for leading this change. 

The first is born of failure: the growing gap between politics and the public.   In the UK membership of political parties has halved in the last twenty five years.  But our country is far from alone in witnessing record levels of cynicism and disengagement.  Average turnout at national elections across the OECD has fallen by 10% in just twenty years.  And yet in many respects public involvement in civil society is increasing not diminishing.  Half of Britons volunteer regularly.  Over one third of people who don’t vote at general elections do participate in a charity, community group or campaign.  Alternative forms of political activity - whether boycotting goods or lobbying MPs - is rising, not falling.  And while 61% of people do not believe they can influence decisions about their local area, 63% say they are prepared to do so.  My conclusion is that the public is not so much turned off by politics, as the way politics is done. Or for that matter, the way public services are run. Public disengagement is a symptom of disempowerment.  Too often we shut people out when we should be letting them in.

Second, such a change is in keeping with the times.  In a world of massive insecurity and constant change people are looking for greater control in their lives.  At the same time public expectations have rightly moved up a gear.  People nowadays are more informed and inquiring. Ordinary consumers a getting a taste for greater power and more say.  The problem is that while people may have become more empowered as consumers, they do not yet feel empowered as citizens. Ours remains a ‘them and us’ political system.  It was framed in an era of elitism.  Rulers ruled – and the ruled were grateful.  Economic advance and universal education have swept aside both deference and ignorance.  Now the internet redistributes knowledge and offers us the chance of being active participants rather than passive by-standers.  Representative democracy worked for the last century.  It is a more participatory democracy that will work in this.
 
Third, equity demands that it should be so.  Despite rises in living standards and falls in poverty in the last decade, a deep inequality gap still scars our country.  We all pay the price.  The wasted potential of the alienated young.  The taxpayers who pay the price of social failure.  The decent hard-working families who live in fear of crime.  I was lucky.  I was part of the most socially mobile generation this country has ever seen.   I came from a council estate and ended up in the Cabinet. I doubt such an outcome would be possible for a child growing up in one of Britain’s poorest estates today.  And I also think it is a moral outrage that it should be so in a country as wealthy as our own.  Over many decades social mobility slowed down when it ought to have been speeding up.  Action by this government has halted that process.  The glass ceiling has been raised.  But it has yet been broken.  I believe it can only be done by shifting the focus beyond the traditional welfare state solution of correcting the symptoms of inequality – such as low wages and family poverty – retrospectively towards an approach that pro-actively deals with the roots of disadvantage before they become entrenched.  By cutting taxes for the low paid.  By giving more people a real stake in society.  By enabling people, regardless of wealth or status, to take greater control over their lives.  By recognising that it is power that needs to be more fairly shared in our society.  The sense of hopelessness that clouds the poorest communities in our country grows out of disempowerment.  Of course beating crime, creating jobs, rebuilding estates can help.  But I have come to believe that this cloud of despondency can only be dispelled through a modern participatory politics which allows both local communities and individual citizens to more evenly and directly share in power. 

Let me give one example of what I mean.  As a teenager I lived in Benwell in west Newcastle, slap bang in the middle of a decades-long failed experiment in urban regeneration. It’s not through lack of effort, whether from local councils, development agencies or national governments.  It’s certainly not through lack of resources.  In the last thirty years this four mile stretch of urban Britain has received £500 million in regeneration monies much of it from the public purse.  It almost breaks my heart to see what has gone wrong.  I’ve seen houses rebuilt and refurbished only to be knocked down.  And then seen the process repeated in a bewildering array of projects and programmes.  Some scored success but overall they missed the mark.  Benwell’s population has fallen by 33% in twenty years.  Neighbouring Scotswood’s by 40%.  One in four people live with a limiting long term illness, four in ten adults have no qualifications and one in two women are economically inactive.  It is officially classified as amongst the most deprived communities in Britain.

There is no single reason why it all went wrong.  Thatcherite recession broke the relationship between employment and housing that had conceived West Newcastle in the first place.  As jobs left the area so did families, attracted by better schools and new homes springing up in more desirable parts of the city.  And as the housing market slumped – at one time you could buy a flat in Benwell for £1 and a whole street in Scotswood if you had a few thousand – landlords moved in.   They lived off the housing benefit system and many cared little for who their tenants were or how they behaved.  Meanwhile, the battery of successive government initiatives too often left skills, schooling and support for families playing second fiddle to rebuilding or refurbishing housing.  But most importantly of all they failed to secure community buy-in. There were, of course, worthy attempts to involve local residents. The complaint is not so much lack of consultation – people complain of feeling consulted to death – as of ownership.   The people who were supposed to benefit from these schemes were never fully involved either in their formulation or their implementation.  It is striking that across the city in the east end of Newcastle an earlier housing development – the award-winning Byker Wall – avoided many of these pitfalls.  Led by architect Ralph Erskine it was a revolutionary approach to rehousing people from the old terraced communities in Byker.  Erskine set up office in an empty corner shop to listen to local people’s views about what they wanted and then reflected their ideas in his design.  Today the Byker Wall has its fair share of problems but the disintegration seen in West Newcastle is largely absent.
It might be a leap of faith to give communities control over housing estates, local parks and childcare centres but the tragedy of West Newcastle makes me believe the old top-down agenda has run its course.  It is time for a new bottom-up approach.  It is already starting to emerge.  Over recent years there has been an explosion in community-run organisations and social enterprises.  Elsewhere in the world there has been an upsurge in finding new ways of successfully engaging people with decision-making. There is the referendum culture of Switzerland and America.  There are the mutually-run housing, childcare, elderly and school services of Denmark and Sweden.  And there is the experience of cities as diverse as Chicago in the United States, and Porto Alegre in Brazil where local people control local budgets and services.

Your sector is uniquely well placed to lead the effort to make this new bottom up approach the rule rather than the exception.  Earlier this week with ACECO I visited Bradford to meet QED and other charities providing employment and training services to ethnic minority communities in the area.   Because they are run by people from those communities they are successfully reaching out to families – women in particular – who too often find public sector services hard to access and insensitive to their needs. 

None of this is to suggest that the State has no role.  Quite the reverse.  We live in uncertain times.  Fear is all pervasive – of job insecurity and terrorist attack, of global warming and of mass migration.  People want to know they are not alone.  But they want also to control their own destiny.  So the modern State has dual roles.  It has to step forward where citizens individually are weak – providing collective security and opportunity – but step back where citizens individually are strong – exercising personal choice and responsibility. 

Some make the fundamental error of believing that modern times mean the State has little or no role.  For others it is more State not less that is the answer.  It seems to me that progress depends on both an active State and active citizens.  It is only the State that can equalise opportunities throughout life and empower its citizens.  Equally only citizens can seize those opportunities and realise their own aspirations to progress.  What is needed is a different sort of State: one that empowers, not controls. 

The Prime Minister should take a lead.  He should instruct every secretary of state and every permanent secretary of every Whitehall department that a new assumption will from now on guide the whole government’s policy:  power should be located at the lowest possible level consistent with the wider public good.  So that would involve Whitehall being scaled back – by up to one quarter in the numbers employed.  It would involve a new rule that for every one new ordinance from a Whitehall department two old ones would have to go.  And it would mean moving power and resources from the centre to the local. 

So both local police and health services could be made directly accountable to local people through the ballot box.  Local councils would be freed from much central government control as their system of financing moved from national taxes to local ones with local communities having the right through referenda to determine locally-decided tax rates.  As in the USA, Canada, Australia and many other countries locally elected bodies would be able to borrow either from the markets or through local bond issues.  The aim would be to get local services better attuned to the needs of local communities.  Where local services are failing communities would have the legal right to have them replaced. Community courts and restorative justice should spearhead a reinvigorated effort to deter and prevent anti-social behaviour.  A new form of public ownership - community-run mutual organisations - could take over the running of local services like children’s centres, estates and parks.    And as individual citizens parents would get new powers to choose schools and NHS patients to choose treatments.  People in old age, those with a long-term condition, families with disabled children or people in training could choose their own publicly-funded budgets instead of conventionally provided services.

Such reforms provide new opportunities for the third sector.  I have little doubt for example that if unemployed people from the Muslim community in Bradford controlled their own training budgets rather than the job centre or the learning and skills council controlling them that community-based organisations like QED would get a fairer slug of funding than they do right now.  My guess is that they would be far more likely to earn the client’s trust than conventional public or private sector training providers.  Similarly, if people in old age or patients with chronic conditions could use State-provided individual budgets to purchase services that better suited their family circumstances, new markets would be created for services that are currently under-supplied because existing commissioners will not pay for them.  Physiotherapy or respite care might be cases in point.  These are often markets where third sector organisations are strongest – which is why I would urge your sector to champion the notion of individual budgets. 

Over the last eleven years the Government has done much to invest in your sector and grow it.  It wants you to be a bigger player both in public service delivery and community engagement.  Nor is the government alone.  Now the opposition parties also shower you with warm words and policy pledges.  There is, however, a gulf between some of the rhetoric and the harsh reality.  I do not believe, as some do, that the voluntary sector can be a substitute for the State but it can and should be an accompaniment.  The public sector and the voluntary sector should be partners not rivals. 

Realising that ambition – which is one I believe the Government shares – requires action not words.  When I was in Bradford I heard the reality all too clearly.  There is a vicious cycle that limits the voluntary sector’s ability to deliver. On the one side, organisations spend time and energy chasing dozens of short-term funding streams. Too many voluntary organisations do important work but can’t get the stable funding that would allow them to develop and expand their capacity. And contracts all too often exclude the overhead costs that are needed to build their leadership and skill their staff.  On the other side, public sector commissioners are often reluctant to break from public sector providers.  Government agencies are nervous about contracts with organisations that lack capacity. They then want voluntary organisations to account for every penny, micromanaging the relationship and clawing back resources whenever they can. In turn, this keeps capacity in the sector down, preventing it from moving up.

It is time to break out of this spiral. Of course Futurebuilders and other government funds have helped the sector.  But a combination of exhortation and investment has not yet delivered the level playing field that the voluntary sector needs if it is to meet the aspirations politicians set for it.  That is why I believe the Government should commit to a Community Empowerment Act to recognise and entrench in statute the enhanced role we want the third sector to play.  This Act would do four things.

First, it would give statutory force to the Compact that is supposed to ensure fairness in the relationship between public sector organisations and voluntary sector organisations. 

Second, it would give voluntary organisations a legal right to bid - alongside public and private bodies - for any tendered public service including those that are deemed by local communities to be failing.

Third, it would make three year funding contracts the norm to parallel the longer term financial settlements the Treasury now agrees with Whitehall departments. 

Fourth, it would enshrine the right of charities in particular to undertake campaigning activities in recognition of the role that organisations like Shelter, NSPCC and Oxfam play. 

I believe these changes would help give good intentions clear substance.  And they would help put the voluntary sector on a far surer footing so that it can play a bigger role both in public service delivery and community regeneration.  But the voluntary sector has to help itself as well as ask for help.  In the new world I am describing success will go to the organisations that get the right balance of flexibility, sensitivity and professionalism in what they do.  You will need to demonstrate the added value you can bring. And that will mean being far clearer about the outcomes you’re promising, and then relentlessly focussing on delivering them.

I hope that if together we can make these changes we can then work together to change something even more fundamental – the distribution of power in society.  To create a new contract between state and citizen in which government creates opportunities and citizens strive to take them.   Where the top down paternalistic statism of the last century gives way to a new bottom up agenda of empowerment that is in tune with the needs of this. This should be our explicit purpose.  It should be the golden thread running through the whole of the government’s policy programme.  If New Labour’s old agenda was driven by competence on the economy and change to the welfare state so the new agenda should have at its heart reforming the State and empowering the citizen. 

Just as at other points in our history an old orthodoxy has been swept away by a new one so I believe this is an idea whose time has come.  In 1945 the new idea was for power to be vested in the central state and its policy expression was nationalisation.  In 1979 the new idea was for power to be vested in the free market and its policy expression was privatisation.  In 1997 the new idea was for power to be vested in reformed institutions and its policy expression was modernisation.  Now the new idea is to vest power in the citizen and the community and to make its policy expression empowerment.  This is the new political territory.  Neither the Right nor the Left have in truth, yet fully come to terms with it.  Whoever does so first I believe will win both ideologically and electorally.  It really is time to make a reality of Nye Bevan’s famous dictum that the purpose of winning power is to give it away.