Is No.11 the Missing Ingredient?

A few weeks ago, in the business I co-own with my brother, a newly recruited senior chef in a leadership position made an error whilst cooking a dish by adding the wrong ingredient. Rather than immediately acknowledging the error (I would never have heard about it if he had), he attempted to cover it up and falsify paperwork. This required him to involve his subordinates in the cover up. They blew the whistle, he was sacked the next day.

When people join a project without buying-in to the goals, they can be at risk of shooting themselves in the foot. This is what happened with our chef.

The proposed imposition of a cap on tax relief available for charitable giving has revealed the extent of a similar problem at the heart of government. At first glance the measure looks like an appropriate ingredient to stop the rich from exploiting tax reliefs to avoid paying income tax. But it doesn’t take long for it to become obvious that it is the wrong ingredient.

Tax relief on giving is an important principle because it suggests that citizens have a role to play in putting their shoulder to the wheel alongside the state to solve social problems. We’re all in this together – if you want to give your income away to help solve social problems and improve life for your fellow citizens, you can do this without being taxed on it. Tax relief on giving suggests that we live in a Big Society.

Capping this relief implies a limit to the degree to which citizens can get involved in the Big Society, saying instead that at a certain point the state takes over and citizens have no further role to play.

This is the opposite of the Big Society. It might be justified by belief in the Big State to solve society’s problems – which is unlikely in the case of the current Chancellor. Or it may be justified by individualism … the belief that civil society organisations do not really matter – that ‘there is no such thing as society’.

At the launch of Big Society Capital earlier this month, the Prime Minister’s belief in civil society organisations appeared sincere. Yet it is interesting to reflect that at the event, and in the months leading up to it, the Treasury have been conspicuous by their absence. The agenda appears instead to have been led by the Cabinet Office in something of a vacuum, in isolation of the purse strings in Treasury.

We can all understand that an error was made with the charity tax allowances – the chaotic, leaky lead-up to the budget was bound to result in mistakes. We can make allowances for the political realities of coalitions. But when you make a mistake – and this is a big strategic mistake because it strikes at the heart of one of the Prime Minister’s signature themes – you correct it quickly.

Does the Chancellor’s failure to do so suggest that he has not bought into Cameron’s Big Society Big Idea?  The safety catch has been flicked. The trigger must not be pulled if the Big Society is to retain any credibility.

There may now be more scrutiny on other areas where the government may be pointing a gun at its own foot. For example, the Government is currently blocking amendment 72 of the 2012 Financial Services Bill, an opposition amendment that seeks to introduce the requirement for the new Financial Conduct Authority (FCA) to go about its business “in a way which promotes the growth and development of social finance and social investment” – as long as this doesn’t contradict with its other responsibilities. This amendment is wholly consistent with the government’s own Social Investment Strategy, and by opposing it the Treasury is contradicting the Cabinet Office.

Is this further evidence of a lack of buy-in to the Big Society idea from Number 11? Who knows. What we can say for sure is that if it is to stand a chance of succeeding, the emergent social investment market needs to be understood and valued by the Treasury.

Hopefully we will see the Chancellor opening his well stocked larder to see what value might be cooked up by the emergent field of social investment in our straitened times.

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