Tory conference: Social enterprises to be paid by results under Tories

Social enterprises being paid for successfully delivering public services without central or local government intervention would be the 'hallmark' of a Conservative government, Oliver Letwin said today.

Speaking at a Conservative conference fringe event organised by the Social Enterprise Coalition (SEC), the Tory MP for West Dorset and former shadow chancellor said a new framework was needed to ensure social enterprises could take risks and innovate without being caught up in red tape.

This included a radical policy of 'payment by results', which would see social enterprises paid for their successes for initiatives set up away from government control.

Letwin said this public service delivery, which could include schools, hospitals and rehabilitation, needed to be at arms length from government because 'we do not believe government is good at managing much...ever'.

Using an example of getting a young person off the dole and into work, and digging at Labour policy, he said 'micro-managed' schemes and putting people into categories to deal with their issues did not work.

'Our idea is that you pay by results and allow the social enterprise to find its own way of doing it, which reflects its own ethos,' he said.

'I can't overstate the impact of that difference. A social enterprise could be paid for getting that young person into work and keeping them in work, without anyone telling them how to do it.'

Letwin added it was a vision to 'dizzy and appal' some, but said it was a 'not just a successful recipe, it's a liberation' as part of the Tory's 'rehabilitation revolution'.

He said social enterprises could 'collect people from the prison gates' and be paid for getting them into work and away from crime and drugs.

And he said people could 'set up schools of many different kinds', which would thrive under the pressure to succeed.

'We believe it would have a huge impact of learning and education,' he said.

He concluded: 'My message today is that social enterprises of one form or another will continue without government.'

Letwin was, however, unable to say what role the banks would play under a Tory government and failed to give his view on legislation that would force banks to invest in their communities, such as the Community Reinvestment Act (CRA) in the US - a form of legislation being seriously considered by Labour.

While avoiding the issue of banks investing in communities and passionately blaming Gordon Brown for public spending deficits, he did declare support for a Social Investment Bank and new ways to fund risk and innovation. He later confessed to Social Enterprise that he did not know anything about CRA.

Steve Wyler, director of the Development Trusts Association, said the Tory policy was 'music to the ears' of social entrepreneurs.

The panel, chaired by The Times' Philip Collins, a former advisor to Blair's government, also included HCT Group CEO Dai Powell, who discussed the need to grow, and outgoing SEC CEO Jonathan Bland, who said 'much, much more' needed to be done to ensure a deeper understanding of social enterprise, especially at a commissioning level.