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Communities and neighbourhoods

Regenerating Communities

Date of speech	29 October 2008
Location	Bank of America Building, London
Event summary	Association of Chief Executives of Voluntary Organisations (ACEVO) Conference

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Draft text of the speech - may differ from the delivered version.

I'd like to thank Stephen for the invitation to talk about 'regenerating communities'.

Perhaps it's appropriate that our sponsors today are Bank of America.

Globalisation means what happens Manhattan has an impact in Manchester - and today's global financial crisis is having ever more serious consequences for people across this country.

What I want to explore is how my Department and the third sector - both of whom have played a key role in the regeneration and renewal of towns and cities over the past eleven years - can find the right relationship as each strives to help people affected by economic upheaval.

Despite all the undeniable and remarkable progress of the past eleven years - the towns and cities turned around by investment, by hard work, and by the commitment of local people, charities, voluntary and community groups - the economic outlook today is ominous.

The last year has seen oil and food prices rising. More businesses, from the smallest to the largest, uncertain about their future. More people worried about their jobs, their savings, their mortgage. And families who work hard and do everything right having to make some stark choices.

I am determined that, in the face of these difficulties, we shall use the full force of Government to help people out. We shall do everything in our power to avoid the mass repossessions and unemployment that characterised previous downturns. That is why the Prime Minister has convened the National Economic Council, which I attended today.

Already the Government has taken decisive steps to help restore confidence and stability: from the recapitalisation of banks, to a concerted interest rate cut together with the US Federal Reserve and the European Central Bank.

My own Department, working closely with the Treasury and the Department for Work and Pensions, is providing extra advice and support for people facing repossession. And there is more to come. I have asked senior officials to look long and hard at our plans and ask, is this going to make a difference to hard-working families? Where the answer is no, we must think again.

But if as a nation we are to get through the tough times ahead and come through the other side in good shape, it calls for action from more than government alone.

The third sector has proved that, at its best, it can find solutions to the challenges people face - whether it's low aspirations, poor health, run-down buildings - in way that is more flexible, more responsive, more rooted in the local community than anything government can achieve.

If that is important in good times, in a tougher climate it is indispensable.

Statistics already show increased demand. Requests for mortgage advice up a third in a year, according to the Citizens Advice Bureau. Requests for fuel debt advice up a tenth.

The Office of the Third Sector is working with charities, community and voluntary groups to fill in the picture of what impact the crisis is having on demand for services across the third sector as a whole.

But I would be very surprised if many other groups - from homelessness charities to those working on skills, training and legal advice - did not see a rise in people coming to them for advice and support.

And the sector's role goes far wider than dealing with the short-term effects of the current financial crisis.

It also has a unique position to help people prepare for the medium-term impacts of an economic slowdown.

Take social enterprise. Social enterprises are already masters at finding uses for resources that the market discards. The First Step Trust's SMaRT project in my constituency gives a fresh chance to people who've found it hard to hold down jobs in traditional firms. Bulky Bob's in Liverpool reconditions or recycles tonnes of second-hand furniture every year. Development trusts, from Hull to London, find new uses for buildings that would otherwise fall into neglect.

This skill - of making the most of limited resources - will be increasingly important as communities adapt to leaner times.

What's more, the third sector can play a part in equipping towns and communities to be ready to spring back when the upturn comes - which it will.

With the opportunities it offers for volunteers, it can give people who are unemployed a sense of pride and purpose. Statistics suggest that being in a job - no matter what job, even if it's lower-paid or demands a lower level of skill than previous employment - gives people a better chance of staying in work for the longer-term than if they stay out of work for six months or more.

And it is increasingly clear that an important element of a robust local economy is a plurality of ownership structures and providers. Or to put it another way, towns and cities will fare best the other side of the downturn where they already have in place a strong culture of social enterprise.

Yet Government appreciates that just as the financial conditions make the third sector's role more important, they also make fulfilling that role harder.

ACEVO reports a drop in donations of a third over the past year.

The local authorities with whom many of you work closely, in some cases providing commissioned services, are looking at tight budgets.

And several charities have been affected by the collapse of Icelandic banks.

The Government takes these issues seriously.

My colleagues have met with representatives of the charity sector to understand the challenges they face.

We are committed to helping charities in their discussions with the administrators of the UK authorised subsidiaries of the Icelandic banks as they seek to recover their deposits.

And we will ensure that all charities that are eligible claimants under the Financial Services Compensation Scheme will receive their money in full.

I think this discussion is a sign of how far the relationship between the third sector and government has developed over the past eleven years.

Gone for good is that old Victorian attitude of the state abdicating responsibility while the third sector picks up the pieces.

Our relationship today is based on new assumptions.

First, that Government cannot afford ignore the huge potential of the third sector to make communities stronger, more prosperous, safer: and where the sector can deliver better than Government itself, we should make room.

Second, that this should not mean stepping back altogether. Government's role is to provide the right frameworks, support and encouragement for the third sector to flourish.

Look at what has happened over the past eleven years and you see Government reaching out to the third sector in new ways.

Government funding for the sector has doubled.

The new Research Centre for Charitable Giving and Philanthropy will support fundraisers to boost their income, and promote tax-efficient ways of giving such as Gift Aid and Payroll Giving.

And we have established the Office for the Third Sector is now a powerful voice within government, listening to the sector's views and reflecting its interests at the highest levels.

But as the global financial crisis makes itself felt in our local communities, and as the third sector's contribution remains core to the achievement of my department's goals, I want to take the relationship - with my department in particular - to a new level.

There are four ways we are doing things differently.

First, I have set up a Social Enterprise Unit so that social enterprise runs right through the Department's DNA. It's often said that the biggest barrier social enterprises face is ignorance, so I want every official to be aware of how social enterprise can help them deliver in every part of policy, from housing to cohesion to the renewal of run-down neighbourhoods.

Second, we have supported a series of pilots to explore the potential of Community Land Trusts - a striking way of putting local people in control of their town's future, and providing affordable, sustainable housing for local people. Those pilots concluded in April. In October, we started a consultation to hear from practitioners about more we can do to help the sector develop, and we are looking forward to hearing a range of views.

Third, in our White Paper Communities in Control we announced a new Communitybuilders fund worth £70m. This is designed to provide community groups with advice, support and for some a large, one-off cash injection to develop their organisation or modernise their operations in order to help them establish their independent streams of income, so that they can spend less time on chasing funding and more on getting on with what they do best.

Fourth, we are also setting up The Empowerment Fund, worth £7.5m, to support third sector groups helping give a real voice to local communities across the country. Today, I'm pleased to publish the final prospectus and invite bids. I think the fund is an interesting step forward - and represents a new way of doing things - because it's not about Government coming to the Third Sector with a very specific and detailed list of things to do. Provided organisations have reach and influence across the country, and have empowerment at the centre of what they do, we're prepared to entertain bids to support…well, whatever they see as the best way of giving people a voice, a say, and a stake in the choices that make a difference to their lives. It's a sign of our trust and confidence in the third sector to find the best solutions.

I'm pleased at how far the range of support we offer has developed in the past year because I want my Department to have a grown-up relationship with it. I want it to be a friend.

But a good friend is prepared to challenge as well as support. And a grown-up relationship allows for robust debate.

So I want to finish today with three challenges for the sector.

First, government is ready to provide support to the sector. But I also want to see the third sector supporting itself. Take, for example, the question of where the sector does it banking. Banks such as the co-op or triodos, like the rest of the third sector, have a particular focus on ethical and sustainable investment. With Business in the Community reporting that businesses managing their social and environmental impact tend to be better at coping with challenges, perhaps more people will be attracted to social enterprise banks and businesses in the months to come.

Second, there are big clouds on the sky at the moment, but there are silver linings - for social enterprises in particular. At a time when people's assumptions and attitudes towards risk and investment have been shaken, social enterprises can gain a new allure. Unlikely to get themselves into excessive debt, and committed to making a difference, they can represent an attractive prospect to ethical investors. So while I fully recognise the new challenges that social enterprises face at the moment, this is also, in some ways, time to grasp the opportunities. The Central Office of Information's recent research said that if the sector is to make the leap from being seen as 'a sector in waiting' into 'the future for sustainable business', then the next big push needs to come not from the outside, but from social enterprise itself. That means telling a story about who it is and what it's there for. Proving its hard-edged business credentials. This is the key to building stronger relationships with consumers, investors and commissioners.

And third, there is another, wider, implication for every part of the third sector. If we see unemployment increase, there will be an ever wider pool of people looking to find new jobs in new sectors, or more free time to get involved in the neighbourhood where they live. If community, voluntary and charity groups can capture that talent and put it to good use then they can not only make a bigger difference to the people they serve but can also give the people working with and for them a sense of meaning at a difficult time in their life. So my question is this - what practical plans do you have in place?

I'm looking forward to hearing the other speakers' reactions.

But in conclusion, let me say that in the tough times ahead I believe Government and the third sector can have the biggest impact if each understands where the other is coming from.

So I look forward to today being just one chapter in an open, robust, and constructive dialogue that will carry on in the weeks and months to come.

Thank you.