What are the important features of an efficient, functioning economy? Is it Gross Value Added (GVA), the number of jobs and businesses created, median wage and salary levels, shareholder value or finding the ‘next Nissan’?
What about the economy’s effect on the environment and its social impacts, those things the social value act seeks to address and which are often of primary interest to the local third sector.
And what part in all this does the third sector have? Particularly at a time when the sector continues to be squeezed by cuts in grants and contracts while simultaneously facing increased demand for services.
We both took part in the New Start/New Economics Foundation/Centre for Local Economic Studies workshop in Newcastle last month to think about alternative economic models.
A steady stream of evidence about widening inequality shows that for the majority the current economic model in the UK is not functional. The Index of Multiple Deprivation 2015 has reported that 83% of neighbourhoods that were most deprived in 2010 continue to be the most deprived in 2015. This surely should be a wakeup call.
‘The reality is that the commercial, public and social
economies of Newcastle are dependent on each other’
How then can the third sector work effectively with the public and private sectors to create and improve economic conditions, especially for people on low incomes? It’s worth recognising that the third and local public sector organisations share a number of important characteristics, quite apart from both bearing the brunt of austerity and public service reform programmes since 2010.
Both have a common interest in meeting local need and both sectors operate as not-for-profits. While in no means blind to cost effectiveness and financial planning, both sectors exist to meet social needs, using surplus income to improve the social, economic, environmental, and cultural wellbeing of people; with any return on investment primarily for social purposes rather than for private gain.
It is reasonable to assume a level of interdependency will form between the sectors and that this should be largely positive. Indeed the reality is that the commercial, public and social economies of Newcastle are dependent on each other. Businesses set up and thrive in areas where people like to live because they have good housing, health and education services; public goods in other words. And the public and third sectors, as well as being significant employers, are all about public goods.
For evidence of this interdependency, look to the third sector’s involvement in Newcastle’s multi-sector partnerships.
Interdependency is manifest outside of the boardroom too. An initiative like Walker Soup, led by voluntary organisations based in one of Newcastle’s most deprived wards, involves the city council and local businesses.
Within the third sector we are increasingly conscious of our interdependence on each other. A few years ago large, small and medium local third sector organisations got together to develop a consortium to seek and secure public sector contracts which no one member of the consortium could deliver alone.
As contracts have got larger and more generic, the sector wanted a way of sharing the work so that each organisation played to its strengths, delivered to the people they reached in the communities they supported, and helped to keep money in the local economy.
The Newcastle Voluntary Sector Consortium was born and has grown in membership and income since our launch at the end of 2013. We deliver part of the very successful Fulfilling Lives Newcastle Gateshead programme which, in its first year of operation, has helped 150 people with complex and multiple needs, those people who often spiral around the system and are excluded from the support they need.
Any day now we will change our name to Blue Stone Consortium and cover the neighbouring area of Gateshead; because we believe interdependency is a positive thing, we want to foster it across local authority boundaries.
Martin Gollan is policy and development manager at Newcastle Council for Voluntary Service. Neil Shashoua is business development manager at Newcastle Voluntary Sector Consortium