It wasn’t Big Society or social value that got Mr. Cameron out of Downing St to celebrate social businesses, it was money; or at least the draw of it. Big Society Capital, long planned and much mooted by Mr Hurd MP, finally launched; but had it not been for the Prime Minister helping out on the PR front, it’s unlikely many social enterprises would have even noticed.

Of course, there is no doubt we need risk and working capital in the same way that any business does. But how will this shiny new opportunity work? Essentially, Big Society Capital (BSC) is a wholesaler which will lend to social investment finance intermediaries (SIFIs), who will in turn lend to social businesses at a slightly lower interest rate than your average High St Bank. I can only hope that spending on both BSC and all the SIFIs will be kept to a minimum, or the £600m available will soon be frittered away; I also hope that the lending process will be attractive and accessible, and sensibly match the interests of socially motivated investors with the need for capital in the social sector.

At LEYF we have been investigating how to get investment to repeat our model across London for some time now.  We certainly found a lot of rhetoric that did not translate into any meaningful investment; partly because many investors just don’t get social value as a part of an investment return, else the offer to businesses was considered so risk averse that it simply was not viable.  Our real breakthrough was winning a contract to work with the Social Business Trust (SBT) which has brought together six large businesses which cover all elements of investment, finance, business management, communication and compliance.  For us, this has led to us being treated like a proper client, and with the offer of serious money to inject into a thoroughly considered and fully costed growth strategy.  As the team making it happen, SBT get the three elements right: social, business and trust.  This last element, trust, being the actual glue that enables us to form the kind of relationship that will allow real growth, expansion and business sustainability.

I hope the launch of BSC will allow for more SBTs, and the more we use this means of investing for growth, the more confident we will become in the market place. There is of course a risk that smaller and lower economic value businesses will not attract funds through BSC. Nonetheless, it still represents a genuine opportunity for some larger mainstream public sector services to enter the market. The key fact to remember here is that social businesses are set up to respond to a market need, but in a way that adds explicit social value. And if we want to increase this value, we have to saturate the market with social enterprises; and investment can help with this. As Bollinger, sponsors of tomorrow’s Oxford and Cambridge Boat Race,  proudly declare “Life can be perfect”; and so it can, as long as we have the chance to raise more glasses and celebrate a social enterprise takeover in today’s capitalist society.

You know you have grown up when you know the date of the budget, the Chancellor’s name and that of the Chief Secretary to the Treasury. Nowadays, I know all three!

The budget is of interest to me for two main reasons. Firstly, what will it do to help parents better afford childcare, and secondly would it do anything to help a social businesses like ours? Having trawled papers of all political persuasions, I found this budget has done at least something for parents, but nothing much for social businesses or charities.

Raising the tax free personal allowance to £9,205 next year is good for all staff working in Early Years, as this is historically a low paid sector, yet the drop in the higher rate tax from £42,475 to £41,450 will put many parents under even more pressure, with less again available for childcare.

Elsewhere I was pleased to see a fairer approach in the changes to child benefit.  I had already tweeted our disgruntlement about the initial unfairness of reducing it for families with one working parent, whilst allowing households with two working parents claim it even when their combined salaries exceeded the same limit. The new model seems fairer, although this first step towards producing a universal credit may be a retrograde one in the long term. Once a small snip makes it through, it will be easier for future Chancellors to trim away along the edge and soon the tablecloth has become a napkin.

I thought the Chancellor missed a trick by not improving working tax credits. It was a good move to exempt families with disabled children from changes here, but he could have done more to improve opportunities for all working parents – for instance letting them qualify for tax credits after 16 hours work. This would have meant fewer families would lose out when choosing to work part time, instead of being worse off than when they were on benefit.

Tax credits offer possibly the single greatest means to helping parents cope with the real cost of working when paying for childcare, and so much more could easily have been done here to make work pay.

The commitment to end child poverty by 2020 looks to be once again in jeopardy, especially if the Chancellor cuts £10bn from the welfare budget by 2016.  The promise to show us how our hard earned tax is used may be helpful here, so we can see exactly what the cuts will do to poorer families. Still, it remains grossly unfair that the poorest should bear the brunt of costs from the Government deficit.

Meanwhile, businesses were no doubt very pleased with the reduction in corporation tax, but sadly this makes no difference to social enterprises.  The Chancellor offered  no tax cuts for those of us in the social or charity worlds; nor did he improve access to social investment, which is key to helping grow and develop business in a way that has the potential to fundamentally change the way services are delivered to our communities. Access to social investment finance is the biggest barrier to business development in the social and charity sectors, but only the sixth barrier to ordinary businesses. Changes to the community investment tax could have made a massive difference here.

Finally, I do hope he keeps a lid on the reductions in UK planning laws. This country needs its green lungs.  We spend a lot of time finding ways to give children in our nurseries fresh air and space to be themselves, and it seems to be getting harder every day. Competing with cars and developers is no mean feat.  Allowing buildings on every site and squashing us all together will not be good for the aesthetic, physical or emotional well-being of anyone.

So what do we think of this budget?  A small glimmer of growth, whilst keeping a tight rein on the budget remains the watchword for households and businesses alike.

Either way, I know one nursery rhyme we might all be learning this week…

A dime and a dollar
Took me by the collar
And whispered this word in my ear:
“We must leave you to-morrow,
But prithee don’t sorrow,
We’ll come back to see you next year.

Leroy F. Jackson

I have just come back from presenting to the judges of the National Business Awards on the 27^th floor of the Gherkin.  It was quite daunting, so afterwards I indulged in two happy hour cocktails with our Head of Finance, Neil Fenton; and calming our nerves among the bankers of the city of London, we mused on the concept of the social enterprise business model.

Presenting to skilled, experienced business people and investors means taking a long hard look at the model.  In our case, the LEYF model combines childcare, training, apprenticeships and community engagement in a way that allows as many parents as possible from all backgrounds to access our nurseries. Profits are pursued, but directly built into improving the impact and sustainability of the business, so innovating to create more and better ways to do what we do.  The judges for the National Business Awards asked us a lot about this and we explained about the importance of social capital, justice and trust.

We were particularly pleased to be finalists in the ‘Transformational Change’ category; and even though we may not win, we certainly gave it our best shot.  Describing our performance as lively and one which kept them engaged, Neil and I were referred to as ‘rigour and imagination’ (maybe more Dangermouse and Penfold). I suspect they were surprised to discover social enterprises were so business focused and interested in making a profit. In any case, we will discover if we are to emerge triumphant at a fancy dinner on November 8^th. I am not sure I will need to prepare a Kate Winslet speech (perhaps better adopt the Gwyneth Paltrow model). In the meantime, we continue to seek the investment funds needed to scale up the business in our move towards 40 nurseries.  With more than 4 in 10 children still living in poverty across the capital, the kind of service we provide is needed now more than ever.

Afterwards, while sipping a Mai Tai (nicely fruity), I pondered on a remark in yesterday’s Evening Standard (September 19).  Sam Leith was commenting on gesture politics and referred to Will Hutton’s recent book Them and Us which…

…argues persuasively, fairness –  and, crucially, the perception of fairness – makes the weather in a society. Capital is important, but what theorists call “social capital” – the glue that binds us – matters too.”

He is right: social capital does matter; especially unfairness such as London boroughs being able to wipe off debts of up to £135 million pounds from dodged council bills, overpaid benefits and unpaid parking fines. Westminster City Council lost £19million from unpaid parking fees and other traffic violations from foreign cars with diplomatic plates. Would your average Joe Bloggs get away with this? I don’t think so! What about our peers of the realm such as Lord Taylor and Lord Hanningfield – convicted of large scale frauds and fiddling expenses, but still able to retain their peerages on the grounds that life peerages are not technically an ‘honour under the Crown’, and therefore cannot be withdrawn once granted. As Eleanor Roosevelt says:

Justice cannot be for one side alone, but must be for both.”

So, while I am not suggesting that social enterprises can alone solve levels of injustice and re-establish trust, I feel that we should at least try and show that enterprise, ethics and an expectation of fairness is possible; and some business models build these into their very fabric. All the more important then that we feature in the National Business Awards and other major business events. We need to be centre stage, and able to explain how and why we add value and contribute to social capital.

Incidentally, if anyone needs a CEO and Head of Finance to deliver ‘Rigour and Imagination’ at a conference, our rates are very reasonable.

PS if the above were not exciting enough, it was also announced earlier today that we are one of  only 25 Award Winners in the Big Venture Challenge, which is great news!  Read more about our pitch and watch this space for how we plan to use the initial £25K investment and other non-financial support.

The last few weeks have been a bit of an intellectual whirlwind, which always gets me really excited.  So for those people who think working with children is all about being nice and patient (and washing your hands a lot), it actually provides a platform for a great deal of intellectual challenge.

On Thursday 19^th May, I got to hear Professor James J Heckman expounding his theories on the importance of investing in the Early Years at the Daycare Trust Lecture organised to celebrate their 25th anniversary. It was a fascinating romp through 40 years worth of research, which continues to show how investing in the Early Years makes sense for the child, the family, the community and society. Two facts in particular resonated powerfully with me; firstly that children’s social and emotional skills are most potent when it comes to extending children’s cognitive development; and secondly adversity gets under the skin and determines the child’s biology.

Heckman also drew a gasp from the audience with his findings that by year three, children from ‘welfare’ families had 500 words, those from working class families had 700 and children from professional families had 1100. What more can you say here, other than parents really need to be made aware of this, so they can do something to address the issue. He then concluded by reminding us that ‘top-up’ programmes for literacy and numeracy in schools had no measureable benefit, nor did reducing the numbers of children in school classes. Instead, what really counted was giving children the best experience before they turned three.

Earlier that same day, I had the pleasure of a cup of tea with the Secretary of State for Education, Michael Gove. In these straitened times, I suspected we might have a cup of tea in the hand. My mother first experienced this when I came to live in London, and she never could understand that you could drink tea without a plate of something to go with it. I have inherited this habit, so asked our children to help out – which under the tutelage of Feyi from our Marsham Street community nursery team, led to fresh batch of tasty banana biscuits! Suitably nourished, our conversation focused a lot on the importance of Early Years – in particular the youngest children and the significance of what we at LEYF call cultural capital. Professor Heckman reinforced the same, with the articulacy that so many Americans possess, and I hope Mr Gove’s team share.

Later in the week, I was able to push again for investment in the Early Years at a Dragon’s Den type experience where six social enterprises pitched to about 50 investors; an event organised by Clearly So and hosted by Coutts. We were trying to persuade investors to support our growth plans with investment that balanced straight financial returns with a social premium return.  It was very scary, not only since I was on first and the only woman, but also as I had to do this in 5 minutes. Somehow I managed to do both, whilst at the same time mingling with bankers and investors in Coutts’ august headquarters. Interestingly, the venue itself was the Coutts library, bequeathed by Angela Burdett-Coutts (1814-1906), granddaughter of Thomas Coutts, founder of the bank.  More importantly, Angela was a great Victorian philanthropist, setting up Ragged Schools for poor children; she was also instrumental in founding the NSPCC. Personally, I love being somewhere which has the hand of a great woman on it!  They also have piped poetry in the bathrooms, which I thought was quite wonderful, so I will be checking out if we could do this at LEYF - with a few nursery rhymes thrown into the mix!

The entire experience and subsequent conversations make it clear that a fresh and full debate is needed, exploring the complex world of social investment with a view to developing some sort of fund, underpinned with a clear and philosophical set of principles, specifically geared to drive more investors into this area. We have to move from an ideology of charitable donation to social investment, with a longer-term look rather than an immediate feel good. My previous bedside reading (the enjoyable Larkrise to Candleford by Flora Thompson) has now been replaced with books about investment and may soon, I fear, also have to include those about tax options for social investors. Who says you never stop learning? Or as Francis Bacon said, a wise man will make more opportunities than he finds. I for one hope this is an opportunity.

I finally concluded a busy week by spending a lively day with the team in our Centre for Research, Learning and Development.  It was a bit of a roller coaster of a day, as we shaped a clear business plan for the year ahead, with the team learning the stark financial realities of running a training business in an economic downturn. Former Head of Children’s Services at LEYF and now Lead for Quality, Learning & Development, Gary Simpson gave us the gem of a quote from Dolly Parton with which we all headed into the sunset:

The way I see it is, if you want a rainbow, you gotta  put up with the rain.”

There is much talk at the moment about the importance of measurement, including a reference to it in many of the speeches I listened to during the TUC march through London against public spending cuts on Saturday (itself a very uplifting and peaceful process which took me back to the marches of the 80s).  The fact is there has always been talk of how we measure the difference we can make, only over the years it was sunk in a pond full of targets.

So, I am pleased to now hear ‘why we need to know if we make a difference’; the only trouble this time around is that much of what is being said is poppycock, and expressed by people who have been on a course – or worse still, now think they are the experts!  A little knowledge is a dangerous thing, especially since in the wrong hands measurement will be misused and become either a financial measurement of success or a target in a commission. In fact measurement used wisely is neither of those things.

We have already seen how confusion over the concept of measuring impact has led many children centres to collect data that has often been neither appropriate, relevant nor actually helped tell the story of the real difference their centre was genuinely making.  In such cases, those concerned simply failed to understand the distinction between input, outputs, outcomes and impact.

Nowadays, we also hear a lot about payment by results which essentially means that a proportion of the payment, from central or local government to providers, is dependent on achieving specified results – for example, a reduction in reconvictions among young offenders.  Elsewhere, Graham Allen and his team have introduced us to the concept of creating funds to develop services using Social Impact Bonds (SIB).  SIBs are designed to secure upfront investment from non-government sources, such as charitable foundations and private individuals, and could offer a real chance to invest in early intervention services.  Investors will then receive their returns from the government once the specified, measured outcomes have been achieved; what’s more, such defined improvements to the service ultimately lead to savings from the public purse.

At LEYF we have spent the last year finding a way of measuring our social return on investment. Social return on investment (SROI) is an approach that aims to capture the social and environmental benefits of a service. The process involves talking with stakeholders to identify what social value means to them; finding appropriate indicators of change taking place and comparing the financial value of the social change created to the financial cost of producing these changes. An SROI ratio is a comparison between the value being generated by the impact of an intervention, and the investment required to achieve that impact.

In our case, we essentially wanted to know what everyone was getting from choosing to use, work or train in a LEYF nursery; it was a laborious but interesting process. The data gathered was used to track the progress of the children, staff members and our apprentices, measuring the outcomes, whether we made a difference and by what amount, before finally benchmarking this against meaningful proxies such as a national average for similar services.  It has involved talking to many, many people – including seeking their opinion on the very measures to adopt.  What we learned from this was that achieving meaningful measurement is far from simple if you want to produce helpful and relevant results.

Over the past few months, I have been talking with and presenting to local authority commissioners about how they might most effectively invest their limited funds in supporting childcare. They struck me as people who genuinely want to get a good service for their clients but are stymied by lack of funds, European rules, lack of direction from their ‘betters’ and uncertainties as to which service will provide the best option. Measurement seems to be the final straw for them, as they try and find solutions to many of the most intractable social ills.

However, there is a wealth of information available and lots of ideas of different ways to commission for better outcomes. We know about the best length of a contract (minimum 5 years), the importance of forming relationships with commissioners, keeping monitoring sharp, focused and helpful, sorting TUPE, dealing with the legal team and the many other issues commissioners and providers have to iron out.  Surely then, this must be the perfect time to pull all these ideas into a coherent whole and move forward?

What’s needed now is a consortia or network based on the principle of Early Intervention; it would bring together providers, commissioners and investors to explore how we might firstly devise a financial vehicle to invest and fund new initiatives and secondly develop a set of plans, ideas and tools to help us measure the results.  Without such a three-way conversation, such a co-ordinated and collaborative approach, we will continue to talk about this complicated, abstract concept in our own little silos with little progress, much confusion and some awful policy decisions the only outcomes.  In the meantime, we will be inundated with toolkits, which will be neatly placed on a shelf and forgotten about.

Right now, what we really need is to be as connected to others as possible.  If nothing else, for starters this would bring the conversation about measurement, outcomes, social investment, payment by results and social return out of the darkness and into the light. Perhaps it is something our new strategic partners at the DfE can develop?

As always, please send me your comments below and continue this conversation with friends and colleagues via email and your favourite social networks.  Where the future of this debate is concerned, I look forward to your personal inputs..!

Related articles

• “Success Bonds” touted as Obama bright idea (nowpublic.com)
• Making the case for early intervention (guardian.co.uk)

What would Lord Shaftsbury, Mary Carpenter or Dr Barnardo make of the ongoing political battle of what to cut and what to save?  What would they make of the government’s sudden hands-off approach, as the local authority squeals how their hands are tied and the rest of the sector stands by frustrated, trying to work out their own place or possible options in this brave/scary (delete as appropriate) new world?

Many charity and voluntary sector organisations are being criticised for keeping far too quiet whilst they try to save themselves.  Forget that approach, have some spirit and pluck; we might as well go down fighting under government opprobrium and local authority cuts.

At LEYF, we are nothing if not hands on.  And like most social entrepreneurs (fundamentally optimistic), we are disturbed to see how rapidly the original intention and real potential to develop and extend this big society seems to be evaporating before our very eyes.  Whilst the designated carer or white knight (aka third sector) of this new world paradoxically faces cuts in the region of 40%, we find ourselves no less immune – needing to magic one million pounds worth of ‘efficiencies’ out of the mutual-inspired hat. And with a good chunk of this due to a drastic reduction in places for children in need, I can only say ‘poor souls’… whilst echoes of the Victorian hymn ‘Suffer Little Children‘ reverberate around the back streets of Westminster and other similarly challenged London boroughs.

However, our philanthropic forefathers (and mothers, naturally) were not ones to roll over in a fiscal crisis, and neither must we. Our task now is to lead and balance criticism of the cuts with a practical and pragmatic set of solutions that can be woven into a clear and coherent philosophy.

But what does this mean; what can and in fact must we actually do..?  First of all, we need to decide what we want.  If early intervention is the mantra, what should it look like?  If Graham Allen wants bankers to invest by developing social impact bonds, what does this impact need to look like to convince them?  If we are to become truly persuasive and achieve our goals, we need to rethink the short-sighted nature of our current response – which at best is all about Children’s Centres (as if they were in every case the embodiment of perfection) and at worst saving individual settings without a sense of responsibility for the bigger picture.

And let us remember the crucial role of professional childcare at the heart of the debate, especially for those children from poor and disadvantaged families.  Let us certainly not forget all we have learned from the huge range of research carried out over the past 10 years – such as the fact that attending high quality preschool has a positive impact on the development of every child, and is even more essential when making a difference to the outcomes of the most dispossessed amongst them.

Our social business model at LEYF gives a great many parents access to such quality daycare for their children, providing both with the range of opportunities they need to step up and make a difference to their own life chances.  Let’s see more of this: we need to help parents believe in self-efficacy, with more consistent and effective dialogue between parents and professionals to help give them greater confidence in supporting their own children; we need to create a more family centred approach to safe guarding; instead of closing libraries and stopping funds for reading recovery (another gross irony in 2011, the National Year of Communication), we need to fund services that will encourage parents to read to their children, since this is undeniably another critical factor in the educational success of young children.

Elsewhere, let’s examine improvements to commissioning; apply the Total Place model and use carrot and stick to induce cross borough collaboration.  And if you’re lost in translation, start by reading pages 8 and 69 of the Graham Allen Report ‘Early Intervention: The Next Steps‘; it will help us mull over the many options.  Remember the wise words of Winston Churchill, and let’s make sure that ‘out of intense complexities intense simplicities emerge’.

Whatever your individual circumstance or priorities right now, we must find a way of weaving a simple but effective message, stating how together we can mitigate any further risks to the futures of those children we care for.  As Eleanor Roosevelt once said, ‘It is today we must create the world of the future.’  So whatever we do, let’s do it with a real purpose and enthusiasm; and as always, with the child at the heart.