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CHAPTER TWO WHAT DID FUTUREBUILDERS SET OUT TO DO?

Introduction

2.1 This section examines the origins of, and influences on, Futurebuilders Scotland. It begins by examining the background to the Programme and its design, before turning to its fit with three evolving policy agendas: public services reform; regeneration; and enterprise.

The Origins of Futurebuilders

2.2 In September 2002 the UK Treasury published a cross-cutting review that confirmed considerable potential for the social economy to play a greater role in providing public services ².

2.3 The Futurebuilders England Programme was announced in the 2002 Spending Review to address these challenges ³. The stated objectives, first embodied in the Futurebuilders England programme, were to modernise and strengthen the role of the social economy in service delivery.

2.4 As a devolved matter, the Scottish Executive was provided with a proportionate funding allocation based on the Barnett Formula. This was to be used, as required, to meet Scottish policy priorities.

2.5 Scottish policy priorities were developed through the Scottish Executive's Review of the Social Economy, published in early 2003 ⁴. This confirmed the Government's commitment to developing the social economy's role in the delivery of public service, and identified three main issues to be addressed:

• unresponsive funding arrangements which result in a lack of stability in income streams and an inadequate asset base within the sector;
• an uneven playing field for the social economy in relation to access to public sector procurement markets; and
• a lack of clarity and associated gaps in the business support available to the sector.

The Objectives of Futurebuilders Scotland

2.6 On the basis of the Scottish Executive Review, and following a gestation period of some 18 months, the Futurebuilders Scotland Programme was launched in late 2004.

2.7 The stated purpose of the Futurebuilders Scotland was set out as:

"to extend and strengthen the role of the social economy sector in delivering better public services" ⁵

2.8 Crucially, the Programme was to focus on areas where the social economy might contribute to the delivery of key Government policy priorities: tackling disadvantage, promoting regeneration, and improving opportunities for young people.

2.9 Later guidance to applicants set out four broad, diffuse, and ambitious objectives, to:

• achieve the Scottish Executive's Closing the Opportunity Gap objectives;
• deliver more or improved services directly to disadvantaged people;
• increase the financial sustainability of organisations through earned income and reduced grant dependency; and
• increase the number and value of contracts being delivered.

2.10 Only one overarching target was set for the Programme - to support 500 social economy organisations to develop their service delivery activities.

The Futurebuilders Funding Programme

2.11 After lengthy consultation, the Programme was set up rapidly over the few months leading up to its launch in mid-December 2004. It was introduced in parallel with the formation of the Social Economy Unit ⁶ within Communities Scotland, which was tasked with the overall management of Futurebuilders.

2.12 The Programme was to be more than just another fund for the social economy. In fact, it emerged as an £18m portfolio of funds, designed to address the investment needs of different segments of the sector.

2.13 Futurebuilders Scotland adopted a broad definition of the 'social economy', to include all organisations with certain characteristics - voluntary management, a social purpose, non-profit distributing, community or user participation. It did not draw a distinction between organisations that operate as or aspire to be self-sustaining, not-for-profit businesses ('social enterprises') and other parts of the voluntary sector that may be more limited in their economic activity.

2.14 Unlike its English counterpart, Futurebuilders Scotland was to follow a tried and tested approach to funding the sector ⁷. 'Investments' were made by way of grants rather than loans due to the known aversion to risk and debt within the sector, and the increasing availability of lending through Social Investment Scotland and others. However, unlike previously, it was to combine direct funding to the sector with a complementary package of training and support measures.

The Investment Fund

2.15 An Investment Fund of £12m was created to target medium to large social economy organisations, with 70% to be allocated as capital investment. Its stated aims were to: develop the asset base of organisations; build their capacity to take on public service contracts or similar earned income opportunities; and strengthen their financial sustainability.

The Seedcorn Fund

2.16 A Seedcorn Fund of £4m was to make awards to community-focused social economy organisations. Its aim was to encourage the trading potential of smaller organisations and to harness the potential of these to deliver regeneration activity. This Fund was match-funded to a value of £1.6m through the European Social Fund ( ESF) Global Grants programme and administered locally by the Communities Scotland area office network.

The Social Entrepreneurs Fund

2.17 A further £392,500 was allocated to a Social Entrepreneurs Fund by the Scottish Executive ⁸. Operating via the Scotland UnLtd Level 1 Small Grants Programme, this Fund was designed to encourage a longer-term flow of social entrepreneurs and start-up enterprises in the sector ⁹.

The Learning Fund

2.18 A Learning Fund of £1m was set up to encourage entrepreneurial talent and leadership skills in the social economy. Its aims were to: subsidise access to existing learning opportunities for organisations unable to make this investment; and encourage the development of tailored learning products for the sector.

The Support Programme

2.19 Another £1m was allocated to measures that would: improve the effectiveness of the various support services that underpin the growth of the social economy; and improve the ability of social economy organisations to access new skills, information, markets and finances.

Policy Influences

2.20 Futurebuilders Scotland was established to contribute to three related policy agendas: public service reform; community regeneration; and enterprise. These have represented evolving agendas that have influenced the role of Futurebuilders, and will doubtless form the backdrop to any successor programme.

The Public Services Reform Agenda

2.21 Futurebuilders was established on the premise that the social economy was well placed to assist public service delivery and reform. Its focus has been on enabling social economy organisations to compete effectively in the procurement of public services.

2.22 The Partnership Agreement of 2003 identified the improvement of public services as a key priority ¹⁰. Since then the public service reform agenda ¹¹ has evolved to include five main elements, to which the social economy might contribute:

• establishing user-focused and personalised services;
• driving up service quality and improving innovation;
• improving the efficiency and productivity of public service delivery;
• joining up services across organisational boundaries; and
• strengthening local responsibility and accountability.

2.23 Central to the public sector reform has been the introduction of Best Value ¹². This places a legal duty on public bodies to consider all options for providing services on their merits, including the social economy.

2.24 As part of the drive for public sector efficiency, procurement practices have come under increasing scrutiny ¹³. A key emerging challenge is in balancing the fundamental criteria of quality, price and timeliness with wider social and environmental considerations ( i.e. the added value of the social economy).

2.25 Since the introduction of Futurebuilders, the Scottish Executive's voluntary sector strategy has emphasised the continuing contribution of the sector, in its broadest sense, to the design and delivery of public services ¹⁴.

The Community Regeneration Agenda

2.26 The Scottish Executive established from the outset that the Futurebuilders Scotland Programme should focus attention on activity that would contribute to tackling disadvantage in Scotland.

2.27 This reflected the Partnership Agreement of 2003, which committed the Scottish Executive to Closing the Opportunity Gap ( CtOG). This included a commitment in July 2004 to pursuing six objectives, which were consistent with the known values and contribution of the social economy, and which went on to form a central aim of Futurebuilders.

2.28 These were to:

• increase the chances of sustained employment for vulnerable and disadvantaged groups;
• improve the confidence and skills of the most disadvantaged children and young people;
• reduce the vulnerability of low income families to financial exclusion and multiple debts;
• regenerate the most disadvantaged neighbourhoods;
• increase the rate of improvement of the health status of people living in the most deprived communities; and
• improve access to high quality services for the most disadvantaged groups and individuals in rural communities.

2.29 Although Futurebuilders did not include any element of spatial targeting, it provided an emphasis on delivering services to, and improving quality of life in, Scotland's most deprived communities - both urban and rural.

2.30 Futurebuilders was, therefore, to provide a catalyst for strengthening the role of social economy organisations as partners and deliverers of public services in those fields and locations where they are most required.

The Enterprise Agenda

2.31 Although not focusing specifically on social enterprise ¹⁵, Futurebuilders Scotland recognised the need to encourage organisations to operate in a more business-like way and to strengthen their financial sustainability (by increasing earned income and reducing grant dependence).

2.32 The Partnership Agreement of 2003 identified growing the economy as the top government priority, and a pre-requisite for building first class public services and Closing the Opportunity Gap. This was highlighted in the Government's refreshed Framework for Economic Development ¹⁶.

2.33 The strategies for Scottish Enterprise ¹⁷ and Highlands and Islands Enterprise ¹⁸ (both introduced after the launch of Futurebuilders) have acknowledged the importance of supporting the development of the social enterprise sector.

2.34 In response to the growing policy attention on the economic dimension of the social economy, a differentiated strategy for social enterprise has now been introduced ¹⁹.

2.35 This puts social enterprise forward as a distinct business model and sets in place a framework for:

• increasing the use of the social enterprise business model;
• opening up markets to social enterprise;
• developing social enterprises as businesses by increasing the range of finance available;
• developing the trading capacity of social enterprises by providing better business support; and
• raising the profile and demonstrating the value of social enterprise.

2.36 The social enterprise agenda has provided an increasingly prominent backdrop to the implementation of Futurebuilders, and potentially a key influence on any successor programme.

Key Points

2.37 Among the key points arising from the above discussion are:

• Futurebuilders Scotland was conceived as a significant new form of investment, focused on strengthening the social economy's role in delivering services in key public policy areas;
• the desired policy contribution of Futurebuilders Scotland was to be threefold as follows:
  • public service reform - it was driven by an ongoing commitment to bring about reforms and efficiencies in frontline public services
  • community regeneration - it was aligned to national priorities for tackling disadvantage and Closing the Opportunity Gap
  • social enterprise - while not adopting an enterprise focus it sought to create more 'business-like' and sustainable organisations;
• the programme adopted a broad, diffuse, and ambitious set of objectives to ensure a contribution to each of the above policy agendas, although the anticipated outcomes were not fully specified; and
• the objectives were translated into a portfolio of funds designed to meet an array of needs within the social economy, and designed as a package of direct grants, training and support.

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