Bridging the gap: how the Inclusive Economy Unit is helping to better connect departments and the private sector
The government’s Inclusive Economy Unit was set up less than two years ago to deliver social impact by collaborating across sectors. Tom Le Quesne, the unit’s head, tells Geoffrey Lyons about how government can support a changing business landscape that wants to achieve a social purpose as well as financial returns
Photography by Louise Haywood-Schiefer
It’s the latest inductee to the panoply of political ideas that attempt to fuse right-left principles, taking its place next to David Cameron’s “Big Society,” which itself succeeded the “Third Way” politics of Tony Blair’s New Labour. In 2016, during what seems in retrospect to have been an exceptionally clear-throated conference speech, Theresa May set out her vision for an “inclusive economy”. Speaking at length on building “an economy that works for everyone,” May reflected the aspirations of a new government unit, created precisely a week later, whose purpose was to do exactly that.
The Inclusive Economy Unit was formerly the Social Investment and Finance Team and is based in the Office for Civil Society, part of the Department for Digital, Culture, Media and Sport. The name change was more than just a re-brand. “The team now has a slightly broader remit,” says Tom Le Quesne, the unit’s charismatic head since October 2016. Finance for charities and social enterprises had been its bread and butter, but it’s gradually working more with the private sector to increase capital invested for social purposes.
Like nobody’s business
CSW joins Le Quesne in what is ostensibly the highest room in 1 Horse Guards Road – the building DCMS shares with HM Treasury, the Cabinet Office and HMRC. “Legend has it Churchill came here with his cigar and champagne to view the Blitz,” he says, mocking the veracity of this claim with a smirk. “Believe that if you want.”
According to Le Quesne, The Inclusive Economy Unit’s raison d’etre is “to work out how government can collaborate with progressive businesses and progressive investors to address some of the serious social challenges that we’ve got in this country.” He goes on to list some of the challenges for which the unit is developing innovative approaches, including problem debt, children on the edge of care, and left-behind communities.
“At a high level an inclusive economy is about an economy that works for everyone,” he says. “But the specific purpose of our unit is to identify where there are opportunities to work with businesses, the finance sector, and social enterprises to try and address some of those challenges.”
The Inclusive Economy Unit deftly operates on two fronts: one within government, collaborating with departments, and one outside it, scoping out opportunities in other sectors. Within government, Le Quesne makes it abundantly clear that it’s not a matter of whether the unit works with departments, but how. “Our work has to be about other departments,” he says. “Whether it’s around housing finance with the housing ministry, or increasing the amount of private investment that goes to left-behind communities with both the housing and business departments, we need to partner with these departments to understand how some of the investors we talk to will want to support these opportunities.”
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Le Quesne uses pension reform as an example of the necessity for cross-government collaboration. “If you want to see more of your pension being invested for social purposes, financial services firms could do that, but there are regulatory implications. So that’s something we’d partner with DWP on – they’re the pension regulators,” he says.
Outside Whitehall, the unit focuses on creating partnerships between the private and public sectors. “Our role is to be a bridge between the two,” Le Quesne says. He thinks it’s a strength that few of his team of 30 have civil service backgrounds, many of them coming from the financial sector. “Often what you get with financial expertise are more innovative delivery models,” he says.
More importantly, financial expertise equips the unit with essential insight at a time when it’s ramping up its work with the private sector. “We’re increasingly working with responsible business,” Le Quesne says. “There’s a huge growth of businesses that want to achieve social purposes as well as financial returns.”
That’s not hyperbole. Two months after the unit launched, an independent advisory panel led by Legal & General CEO Nigel Wilson published a report showing a significant rise in what it calls mission-led businesses. One of the report’s findings is that large corporations are increasingly moving away from the “offset” model, in which resources are allocated to a corporate social responsibility department, to a broader approach in which social impact is integrated across the whole business.
“The idea of an organisation that cares about social purposes has become much, much broader”
The report identified an even greater groundswell amongst smaller firms, in no small part due to an explosion in the number of start-ups dedicated exclusively to addressing social challenges. Third Space Learning, for example, launched in 2012 and uses technology to provide children with access to maths tutoring. Patients Know Best, launched just last year, gives patients control of their medical records through an app. And since September 2015, UK businesses big and small have been eligible for the esteemed B Corp certification, awarded to companies that meet high social and environmental standards. Currently over 120 UK companies are B Corps.
The environment in which Le Quesne’s unit is working is therefore rapidly developing. “If you were asked to define the ‘social sector’ 15 years ago, people would have said it’s about charities,” Le Quesne says. “If you asked 10 years ago, people would have said it’s about charities and social enterprises. But now, major companies are talking about this. Major finance houses are talking about this. The idea of an organisation that cares about social purposes has become much, much broader.”
Le Quesne sees this shift as a reflection of how the global climate change debate developed in the late 90s. He says that 15-20 years ago, climate change wasn’t a concern for mainstream businesses. “But then a few pioneering and visionary leaders in the private sector started to talk about it more as a core business issue, and now, for many of them, it’s just that,” he says.
In addition to supporting responsible businesses, Le Quesne cites four key programmes that are a main focus for his unit: growing social impact investments, developing Social Impact Bonds, implementing the expansion of the Dormant Assets Scheme, and delivering the government’s Public Service Mutuals programme. “They’re all pretty major programmes,” he says. “Underpinning them all is the same challenge: how to unleash the entrepreneurship of the private sector but do it for social impact.”
“Social impact” is the objective for virtually everything the unit delivers, but one can be forgiven for thinking other departments aren’t using innovative delivery models to achieve it. Le Quesne believes that’s changing. “In some cases, departments are absolutely using innovative models,” he says, citing as a prime example Social Impact Bonds, the popular new outcomes contracts. “We’re at the stage where five years ago there were a tiny handful of SIBs. There are much more now.” SIBs have been launched from several different departments, including the Department for Education, the Ministry of Justice, and the Ministry of Housing, Communities and Local Government. Alina Sellman, head of the Inclusive Economy Unit’s Centre for Social Impact Bonds, told CSW in a recent interview that her team is working closely with other departments to bring SIBs to scale.
Le Quesne is also enthusiastic about the potential to use dormant assets – unclaimed funds such as an idle bank account – for social good, work his team is carrying out in collaboration with the Treasury. In March 2017, the Dormant Assets Commission, tasked with identifying new pools of dormant assets, published a report concluding its 12-month review of the Dormant Assets Scheme, which allows banks and building societies to give unclaimed assets to a fund used for good causes. The report estimates that up to £2bn in additional dormant assets can be tapped if the DAS were to expand beyond bank and building society accounts.
“The question for government now,” Le Quesne says, “is to say: ‘Okay, there are clearly more assets that can be available. How do we put in place the changes that would be required to bring those into the scheme?’”
The government recently announced that, under the existing scheme, a further £330m will be used to help the homeless and disadvantaged young people. It anticipates that within two years the total amount distributed from dormant accounts to good causes since the start of the scheme in 2008 will be more than half a billion pounds.
Like many of his staff, Le Quesne has a multi-coloured résumé, having spent 10 years at the World Wildlife Fund before a nearly three-year stint at the Infrastructure and Projects Authority. He has published articles and given talks on the topics of natural resource scarcity and water rights, a niche that can be traced back to his dauntingly-titled Oxford thesis: The analysis of multi-tiered natural resource management institutions.
“Well, that’s my training as a development economist,” he says with a laugh. “And a lot of what we work on in the unit is economics.” Le Quesne believes that some of the government’s more innovative work is only just coming to grips with ideas that have been long-established in the development sector. He sees organisations like the Bill & Melinda Gates Foundation as the advance guard for delivering social impact. “Some of the work they’ve done is just a totally different way of thinking about achieving social outcomes at scale,” he says. “Are there things that we can learn from that?”
Despite the diversity of his CV, Le Quesne is a bona fide public servant. If he’s not working in Whitehall, he’s working with it, saying that the most interesting projects he took part in at WWF were in collaboration with governments in the UK and overseas. He says that by the time he arrived in Whitehall, he was already used to it. True as that may be, it shouldn’t diminish the fact that Le Quesne’s experience outside government gives him a unique strength – especially now that he’s on the inside looking out.
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