“Something-for-something” – Rental sweat equity combined with using rental incomes to stimulate locally focussed social enterprise
Description: Dan Gregory’s proposal combines:
- Voluntary contributions of time matched with discounts to rents
- The development of an ecology of locally rooted social enterprise, and
- A commitment to social enterprise procurement from commissioning organisations
To create a range of locally anchored incentives to both improve the community and stimulate local economic activity. The social enterprise activity could be seeded with rental payments that are reallocated in such a way as to benefit from the 30% Social Investment Tax Relief (SITR) recently created by HMRC (or from the forthcoming Right To Buy subsidy).
Improvement: Potentially significant buy in from tenants to build social capital while reducing likelihood of take up of Right To Buy. Significant local economic benefit created, over time, by focusing on local social enterprise. All rent redirected to social enterprise potentially benefiting from a 30% tax incentive.
Dan Gregory’s contribution to Rental Matters
In the run-up to the 2015 General Election, influential figures in the Labour Party flirted with the idea of ‘contributory welfare’. This is perhaps best explained as ‘something-for-something’ in contrast to a perceived ‘something-for-nothing’ system of benefits. Meanwhile the Conservatives also floated the idea of a two-tier welfare system with higher benefits for those who had paid in. More than half a century ago, Beveridge himself said “Benefits in return for contributions, rather than free allowances from the state, is what the people of Britain desire.” Yet there are serious problems with the idea of contributory welfare in practice. Practically, how to recognise those who contribute in other ways, such as parenting or caring? And in principle, a system where the more you pay in, the more you get out makes the welfare system less redistributive and more akin to an insurance system. To each according to what they deserve rather than what they need. This may of course be a good idea but is this really what our welfare system is for?
Meanwhile, in Bristol, new housing association tenants have to sign up to compulsory volunteering (sic) in a scheme being trialled by United Communities. All new tenants are expected to volunteer in the local community for a minimum of 12 hours per year and attend a course on managing money, paying rent, being a good neighbour and more. Chief Executive Oona Goldsworthy says “The view of many landlords is a bit paternalistic: ‘We will do everything for you’.” The pilot is intended to “move away from service-led, top-down approach to genuine citizen empowerment and involves residents, communities and the professionals who support them.” This is explicitly about incentives and changing behaviour.
Further afield in Cleveland, Baltimore and Detroit, a seemingly unrelated new economic model has been emerging, based around co-operatives and community anchor organisations. These institutions such as universities and hospitals are tied by place and have multi-million or even billion pound budgets. So they can make their money work harder for the local community by prioritising local hiring, through smarter and more social procurement and more. In Cleveland, the Evergreen Cooperative Initiative is a cluster of worker co-ops which were developed explicitly to provide services to these universities and hospitals, offering a laundry service, for instance, solar energy and vegetable farming. This model has attracted interest from around the world and the businesses have grown, albeit rather more slowly than some advocates of the model had suggested and with no insignificant subsidy up front.
How might these three models or ideas come together to inspire Trafford Housing – or indeed any other Housing Association – as it thinks hard about how it tackles poverty, inequality and injustice? Perhaps there could be a model here that combines elements of each of the above, while improving on some of the more problematic characteristics of each? A contributory principle but applied to rent not to benefits. A volunteering-type model but one which is rewarding not compulsory. And a model of local, social enterprises in the supply chains of larger anchor organisations but with less subsidy and less hype.
So unemployed tenants – and part-time workers, carers and parents – could choose to commit to engage in enterprising activity and receive a discount on their rent in return. This work would deliver produce, products, good and services which earn income for the local community, for Trafford Housing, for new subsidiaries or for special purpose mutual and social enterprise vehicles. Whether from left or right, from Margaret Thatcher to protest singers and from Karl Marx to John Bird, we can all see meaningful enterprise, worthwhile work and rewarding endeavour at the heart of tackling poverty.
So Trafford tenants could develop a co-operative tenant-owned ground maintenance company, a social enterprise laundry, a staff-owned grounds maintenance business, a community solar farm, a mutual maintenance firm and employee-owned plumbers and builders.
And Trafford Housing, together with local colleges, universities and hospitals could commit to channel contracts under the new EU threshold of €750,000 towards these new enterprises, or through social value clauses and the new mutuals exemption – which allows contracting authorities to restrict competitions to social enterprise-type businesses.
With some imagination, maybe these start-ups and enterprises could even be financed by exploiting the new Right to Buy subsidy, which could be harnessed to provide up front investment. Or perhaps through enabling working residents to postpose rental payments if they instead put the money into investing in these enterprises, with Social Investment Tax Relief at 30% providing a cushion to ensure the resident-investors will ultimately see enough return to cover the rents postponed. Grant-makers and social investors are likely to see some potential in these models if they are backed by the clout of a large institution like Trafford and if revenue streams are foreseeable – elements too often missing form many social investment propositions.
However these models may be financed, the ideas of something-for-something, of creating incentives which reward behaviour in the common interest, and of buying local and buying social are ones which could, together, be even more powerful than they ever might be alone.
About Dan Gregory
Dan has a considerable range of experience of funding and financing social enterprises, through developing policy at the highest level and delivering in practice at the grassroots. He has worked for the UK Treasury and the Cabinet Office, leading the development of government policy on third sector access to finance, social investment and the role of the sector in service deliver. Dan has also led the development of a number of pioneering developments in practice, for instance, helping supporting business planning and development of public sector ‘spin-out’ social enterprises and developing a number of innovative social investment models and funds.
Dan spends some of his time as Head of Policy at Social Enterprise UK and Director of the Social Economy Alliance. He also works independently under the banner of Common Capital, including working for NCVO, Co-operatives UK, Baxendale and the Alternative Commission on Social Investment. He also works at a more local level, for example with Meanwhile Space CIC and the Church Conservation Trust.
You can contact Dan at firstname.lastname@example.org.