Memo to Dave

Yet again on my doorstep I see 'juicy' contracts awarded to purely commercial businesses against competition from social enterprise. I have written bids in both the socent and commercial sectors, and have evaluated bids and awarded contracts as a commissioner, so I know more than a little about this. Social enterprise is still being held back, and the social value bill will make little difference.

When constructing a bid, a commercial bidder will look at the base cost of delivering the service and do so from the point of view of minimum staff costs, stripping out all unnecessary costs and investments, and in taking their targeted profit. If they win the contract and the inherited staff or service levels do not support their profit requirement they simply throw out whatever is overweight to ensure that they do not lose out. Even if a social enterprise bid is measured on its promise of returning profit or investing it is unlikely to win against the purely commercial bid. A social enterprise will not plan to reduce service quality or to treat staff badly by moving their bases just far enough to make sure they leave but not far enough to require any help with resettlement. Instead, if a social enterprise thinks the contract comes with surplus staff it will cost in proper redundancies and include these in it's bid. There are many similar ways that the playing field is just not level.

In retail services, those sold direct to the public, social enterprises have even more difficulty, in that just about anyone can make themselves look 'social' if they want to and to make a true social offer takes a lot of marketing space. John Lewis is often mentioned as a social enterprise, and people trade with it because of its status, but I would argue that it is not social. Trading for the benefit of your employees is natural and welcome, but it does not make you social. Only trading for a wider community can do that.

What do we do about all of this?

One of the outcomes of the research which underpins my Unofficial Big Society Green Paper is that social enterprise needs a defining mark. I'm not sure that 'Society Profits' (the brainchild of Social Enterprise UK http://www.socialenterprise.org.uk/) is it, as who can use it, and how it is used, are the responsibility of an organisation to both create the rules and police it. To gain real public trust social enterprise needs a legally-defined state of existence marked apart from purely commercial businesses by a distinct company marker, like ltd and plc.

This would do three things. It would create public trust and would enable easier measurement of the size and impact of the sector. It would also enable a market to be made in purely social shares and provide a way for philanthropic individuals to easily invest in a range of businesses and measure the returns that they make and/or receive.

Obviously, any truly social enterprise would find it much easier to connect with its community if it could trade in this way and it would also help when bidding for contracts, as the return of profit and reinvestment promised in a bid could be part of a much more structured arrangement. I would also encourage all social enterprises when bidding for state contracts to construct two pricing scenarios. One the bare minimum cost, treat everyone badly, drop anything unprofitable offer that is common in the commercial world, and the other their own bid. This will show commissioners that they have considered where the cuts can be made, and how cheaply things could be done if the basic rules of a civil society are ignored, but that they will do it differently. It goes without saying that the closer together that the two costs can be brought, the higher the chance of winning the bid. All of the 'gap' however could be argued to be of social value, and by constructing two prices it will be easier to identify where the cost of that added value is. Explaining the cost of it, perhaps even making it an optional part of the bid, will help commissioners to justify awarding the contract even if the socent is not the lowest bidder.

The Government has of course done very little to help social enterprise. The sector is poorly defined, impossible to measure and yet it should be the cornerstone of the Big Society. The social value bill was not even a government bill and yet it is the only tangible support for the sector apart from a new 'bank' created by co-ercing money out of other banks. Although it would risk the ire of capitalism please be brave and give social enterprise a proper central place in society and it will repay you a thousand fold by making society big.

Budget Memo to George

A mañana budget is the only way to describe it.

The pre-budget hype, radical moves on pensions for example, is simply not matched by the way you seek to gently tinker with a failing system. Many of the changes in personal taxation are delayed until 2013, although the economy could do with a genuinely redistributive boost now, and an automatic future extension of the pension age means that people will eventually be completely stuffed by the system.

Funding state pensions from current day receipts is simply not sustainable. At the moment it is a struggle and already people have to work for around 50 years to enjoy perhaps 30 on a pension that is a tiny fraction of what they earn, or even contributed. In 15 years time, according to my rough calculations, around 22% more people will be drawing pensions than today, relative to those in work. Extending the age at which you can draw a pension to match increases in life expectancy will simply not plug that hole and unless you plug the hole now it is likely to be unpluggable.

The Unofficial Green Paper contains suggestions on ways to deal with this, but the budget is just another missed opportunity. Yet again a government seems to be slowly releasing cash to engender a feel good factor just around election time rather than genuinely planning for the long term.

There are three things that you should urgently do:

• Fully review the future of all pensions
• Fully review the future of health and social care funding (not delivery as in the current NHS Bill)
• Fully review the status of social enterprise and its capacity to support the above two categories of expenditure.

Once you have done this you should be open with people about exactly what they will get for their contributions for the whole of their lives. The Green Paper carries the full list of suggestions. This is urgent and matters hugely to the '99%' many of whom do not yet realise how much. Please do not leave it much longer.

Memo to Dave re Roads

Oops! Thinking out loud again by you and George has set the hares running. Perhaps that is what you wanted so that a watered down version of the plan to allow private business to tax us even more for travelling would not seem so bad when it is announced.

Yet again though the pronouncements miss the point and the fine words about having a strategy and taking a long term view are not matched by the ideas. I do agree that 20 years is a long time, but committing the taxpayer to pay private companies to build and run roads for four terms of government is not a strategy, it is a straightjacket.

The Unofficial Green Paper (www.bigsocietygreenpaper.org) proposes a national system of social enterprise and the roads could be a perfect test case for such a body. Why not create a national company, owned by the state pension fund but run by business people and give it the entire roads network as an asset? Give it the income from road tax as an income, targets for measurable outcomes and allow it to do the rest? It's all very simple and such a business would be hugely successful provided that its investment in new roads is properly measured for all outcomes, not just based on immediate financial return.

The new business could partner with private enterprise where appropriate but could also over time spawn hundreds, perhaps thousands of new social enterprises and new small British-owned businesses to provide the services that it would need.

This is all very simple and could be set up and announced within a few weeks. As always I am happy to help if needed!

Memo to Dave re Business Lending

The 'new' Loan Guarantee Scheme which is supposed to free up business lending is of course more PR than AU (actually useful). I haven't been able to find precise details of the scheme but a similar one has been in  existence for 20 years or more, when I was a lending banker actually trying to lend the things. The supposed 1% discount is a nonsense.

The traditional scheme has several weaknesses for business:

• It requires repayment over a relatively short term, 2-5 years, making it unsuitable for many large investments
• Banks can still require security for any unguaranteed portion of a loan
• Interest rates can be flexible, providing longer term risk to affordability
• The Loan Guarantee Premium is passed on to the customer adding further cost to the loan

There is insufficient detail of the new scheme to see what if anything is improved but the trumpted 1% saving on interest cost over a normal loan is simply not real. Banks will credit profile a customer through his application and come up with whatever rate they want to earn the profit they choose from that piece of business. It is pointless saying that if they would have lent at 7% they will now lend at 6%. Banks are far more devious than that.

And all of this slightly misses the point. Short term loans may help some businesses, but not that many. If I want to buy a piece of machinery to last 20 years I am unlikely to be able to afford to buy it over three years. Another flaw in the scheme is that the taxpayer now takes the risk on the banker's decision but gets none of the reward when it goes well. What is needed is a national investment scheme, preferably targeted at social enterprise but able to help all small and medium business which returns a share of any resulting profit to a central pot. This is proposed in the Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org) and would really help business to create jobs whilst potentially helping to solve other problems.

Memo to Dave

On your return from the USA you will find that not much has changed. The unloved and scary NHS Bill mysteriously continues to win votes whilst alienating people. Social Enterprise continues to peck for crumbs around the capitalist feeding table that is public expenditure and the vast majority of people continue to look at all your 'reform' and 'change' and wonder why. Not why as in 'why are you doing it?', they're all reasonably convinced that you're doing it for your capitalist mates, but why as in 'where is the plan?'. They're wanting to know if it all fits together and if so, in what. Is it really an attempt at improving lives or is it fiddling while their Rome burns but someone else's Mammon is further gilded?

This is a valid question as it is becoming increasingly accepted that the current incarnation of capitalism has failed and yet you continue to prop it up. In a situation where your actions appear illogical people will naturally suspect impure motives. We have a short window of opportunity to produce a new world-class economic system from the rubble of 20th century capitalism. As Adam Smith might have said, the next system is unlikely to perfect, but with hindsight we should at least be able to make it better than the last one.

The Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org) argued that social enterprise should be at the forefront of any new system. It contends that we should not try to change capitalism but force it to change itself, or die. We can very easily do this by the creation of a new social enterprise trading structure which measures social value and social return as part of the criteria for the award of any state contract. Christopher White's recent 'social value' bill goes half way to addressing this, but there remains a big gap and we allow too much capital to flow out of our system before it has reached all parts.

In addition, social enterprise is often a poor cousin to business, relying on handouts, grants and specialist funding to gain a foothold next to 'real' business. This is wrong and whilst there are many worthy attempts at improving access to funding and real contracts, these are always coming from the view that social enterprise needs a leg up because it is worthy or trendy. It's a bit big society, but apparently not interesting enough to be part of any formal policy. That needs to stop. Capitalism has become anti-social. It is anti-social enterprise and social enterprise needs to be seen as the purest form of Adam Smith's capitalism that currently remains. It needs to have pride of place in the pecking order before it is too late.

The next thing we need therefore is a social return bill, to go alongside the social value bill. An act that enshrines in law the obligation for any public body to measure the return of profit to a community from a social enterprise. This needs a very careful piece of legislation which defines social enterprise, gives it a structure within which to operate and ensures that all of its returns are key parts in the award of any contract. This will make anti-social enterprises think much more closely about how they operate and how they bid for business. It is not red tape, or an attack on capitalism, it is levelling the playing field between social and anti-social enterprise.

We have come some way towards it but have much further to go. The Green Paper also discusses ways that these returns can be co-ordinated to a much greater good, but more of that another day. I have just spent 5 years of my life battling against small p politics in a local setting, so I know how Steve Hilton feels, but don't give up on the Big Society if you really want one, just support it with a big plan. Soon.

Memo to the BMA

The headlines read: 'Doctors to ballot for pensions strike action'.

As with local authority and NHS or even Civil Service pensions, there is no way the country can sustain a scheme which does not take enough in contributions to meet the cost of the benefits. That said, current contributions are meeting the cost of those already retired, and are not in any way related to the cost of providing benefits to the contributor. That is what is wrong with the current system and arguing over who pays what today is fiddling while Rome burns.

I support the BMA'S approach to the Government's NHS reforms but on this you are out of step. The government has made an unreasonable set of proposals to try and prop up the system for a few more more years and you have tried to persuade them to water it down. This is another way of saying 'subsidise doctors pensions'.

None of this should be up for discussion. There should be no subsidy of anyone's pensions, and ideally everyone would have a good enough pension that the state pension would be nothing more than a safety net. This would save a fortune and help to rebalance the books of our country. It is one of the key recommendations of the Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org)

It would be very good therefore if the BMA, and any other similarly-threatened bodies, could alter their opposition to changes to a more strategic stance. Let's not have a stand off over who chips in how much to the black hole, let's have an open discussion about how we ring-fence and the fund that black hole, and what better system we create going forwards. That would be something worth striking over and in that it would improve pensions for everyone it would gain widespread popular support. It could also galvanise a group of similar representative bodies and unions which might just be enough to get Dave to take notice. I am happy to help with the detail if you wish.

Memo to Dave

The City of London and assorted cronies are now about to evict Occupy LSX. I am not as wild about the OLSX movement's choice of location as some but I follow David Allen Green (http://www.newstatesman.com/blogs/david-allen-green/2012/02/city-cathedral-camp-occupy) in his thoughts that they have performed a valuable service in exposing the fragility of both capitalism and law.

The laws and legal argument that has been used for the eviction are tenuous to say the least, and as always one ends with the suspicion that the outcome was inevitable and the argument irrelevant. Chasing Occupy LSX from St Paul's will not end their movement however, nor will it make capitalism any stronger or better. The Occupy movement is just one of a growing number of voices who point out that capitalism has gone too far, has been too successful, and now drives capital too quickly to too few participants. Whilst Occupy have been peaceful, unlike last year's riots, they are both singing different verses of the same hymn. Discontent is rising, too few of us are paying in to the system and in our old age we will feel even more cheated as there will be less to take out.

The Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org) suggested ways to get ahead of the curve on this and deliver a fair and sustainable society for all of us. The alternative is more occupations, more riots and more discontent generally. As more and more people see less point in contributing to society, whether through taxation or practical help, the burden on those who are trying to save it rises inexorably. The rapid decline and then death of national and even continental civilisations historically comes very quickly after they peak. Unless you take bold action it is quite possible that we will peak in the next 10-25 years, taking a 1000 year view. Please do not think of the removal of Occupy as a victory, think of it as an opportunity to do the right thing without overtly giving in to them and before the next, possibly louder, wave of discontent breaks on our shores.

Memo to Andrew Lansley - How to save the Health Bill without changing it

The response to mounting opposition to the NHS Bill is not yet meeting the required standard. The concerns are far deeper than either political manoeuvring or self-preservation by empire-builders, although there are obviously elements of both. Before doing anything further if you stop and analyse the resistance you will find a common thread. It is that no-one understands how the reforms will actually get the NHS to a better place, and it is therefore causing fear rather than excitement. In effect it appears to be the fiddling while Rome burns. I have spoken to several GPs involved in new clinical commissioning groups who can see the logic in some of the arrangements but fear the funding will not support the needs of their patients and alongside that existing NHS commissioners are saying that the changes will do nothing to re-position the service to cope in 10 or more years time, that will need hard cash.

The Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org) has a full chapter on the NHS because of it's importance to us and your reforms may well drive efficiency but they have two glaring omissions. Firstly, they do not show how they are compatible with the future financial strains which demographics alone will place on healthcare and the funding of it. This leads GPs especially to be wary of being the gatekeepers of insufficient funding and as a result being the ones to tell patients that they will be left to die. Secondly, the reforms fail to demonstrate how they will protect the NHS against lowest common denominator services which will result from a totally free any willing provider system.

What is needed therefore is a sub-bill which enshrines the role of community-led social enterprise in the NHS and does so within a framework which ensures open competition whilst supporting the funding model through reinvestment of profit. Secondly, you need to address the whole system that funds health, pensions and social care from current day taxation. This system frightens the life out of me and will break at some point, leaving us like Greece. No amount of reform or doing more for less can save a system in which twice as many people need help as those paying for it and that is where we are headed.

The Green Paper talks at length about this issue but in a nutshell you can save the bill by two relatively simple actions, which it will be easy and beneficial for the coalition to support:

1. Commit to a system of competition in which all outputs are measured, not just the financial, and in which the state seeks a return of profit from providers. This will ensure that social enterprise becomes the main delivery vehicle for our healthcare and avoid the danger of back door privatisation.

2. Commit to a new system of funding, on a whole of life basis, which will guarantee that a standard set of treatments and social/pension benefits are available nationally to all those eligible. 

This will not only help financially, it will help voters to believe in your full support for the NHS and also help those inside it to believe that the reforms will not simply be used to squeeze the NHS to save cash. These are not nice to have bolt ons, they will save your Bill. They will underpin the modernisation of the NHS as well as transform the financial position of the country.

Memo to Dave

Yet again you are the prisoner of your own promises. The pay of Stephen Hester has become a running sore despite the fact that it is relatively modest by banking standards. It was of course pretty daft to promise to sort out excessive pay without either defining what that meant or putting in place any tools with which to do it. In a capitalist society tools are in any case very limited without forcing companies out of our economy.

It seems the red tops are pushing you towards a corner marked '£1m salary cap' and you need to counter this before the only choice is a damaging u-turn which would harm the UK economy. In the context of solving the immediate problem, we do not have time to create social enterprise banks to compete with the purely commercial ones, although of course in the long run this is the answer. A wholly state or community owned bank could reward very differently and still attract sufficient talent.

In the current situation however you have a very limited set of choices. My favourite would be to peg Hester's pay (and the rest of the Board) to an index of other comparable bank pay, with a mechanism to ratchet the actual rewards based on performance. That would not just be on share price or profit, chasing those is what got Fred into trouble. It must be a range of indicators around customer satisfaction, cash generation and so on. If Hester can turn the bank into a cash cow, feeding money to keep our tax down I don't think his salary would be news any more. It seems to me that at the moment there is no meaningful link, in the eyes of most people, between performance and reward. Restoring that might well get you out of the corner without having to use a bat or compromise capitalism.

Memo to Dave

The Economist this week publishes a special report into what it calls state capitalism: commercial businesses returning profit to the state owner. As usual, the report is well balanced and illuminating. Under the title of the Visible Hand it is also interesting to see a nod to Adam Smith.

The report in particular looks at emerging markets, revealing that the state has the largest stake in the 150 largest companies in China for example. The Big Society Green Paper (available for £11.99 at www.bigsocietygreenpaper.org) makes the point that the UK has too many exit routes for capital, aside from the other problems created by our western version of capitalism. The emerging market version seems increasingly to control the flow of capital, and especially of profit, but this is of course not helpful to innovation and growth.

In the Wealth of Nations however Adam Smith proved that increasing wealth is more important than the speed at which a nation grows. This seems to have been forgotten and Smith is looked upon by modern economists as most of us would look at a mad elderly aunt. The Green Paper contends that his principles have not changed, that there is no such thing as a free market and that keeping profit and finding modern ways to evidence the wealth of the nation will be better for us than a totally 'free' market with capital permanently leaving our shores whenever it chooses.

The current free market is rigged in favour of those with the capital and it is just as bad, just as imperfect as an incarnation of Adam Smith's capitalism, as any state controlled economy. The cronyism and inefficiency is perhaps just better hidden. This all needs an urgent overhaul and social enterprise is the key ingredient in your toolkit. Not co-operatives alone, and certainly not employee owned businesses, but real businesses run by social entrepreneurs for the benefit of the country or a particular community.

Social enterprise is the ideal half-way house between state capitalism and a 'free' market, enabling national wealth to be created and retained. A full plan is in the Green Paper but it would be good if you could spend a moment this week reflecting on the bigger picture. UK Plc had its best years long before the arrival of the free market. We got away with some blatant protectionism and did well ourselves by controlling emerging markets. We are now disinvested, making healthcare and pensions promises that will be unaffordable some time in the next 30 years, and have very little in the way of structures for building permanent national wealth.

There is a way to reverse this and to revitalise and modernise our economy to bring it out of depression and the people with it. A bottom up state market, controlled by social enterprise and perhaps contributing to pensions and healthcare funding, will energise and engage people even without directly giving them shares in it. It will drive innovation and capital and it will do so in that unique social enterprise way - caring, ecologically sound, inclusive, widely distributive. If you are looking for a way to make a lasting mark on Britain you will find it in social enterprise and you might even call it a Big Society. In the Green Paper however it is described as a Big Commercial Society and it would create a completely new and better deal for the people of your country.

Does David Cameron really want a Big Society?

Much has been said lately of co-operatives, mutuals and social enterprises. As long ago as 2004 Rebecca Harding at Delta Research was arguing for a new definition of social enterprise and if anything the waters have become murkier since. If there is a problem in the lack of a definition, and I am in the 'there is a problem' camp, it is that the lack of a definition is holding back the growth of the sector.

That is not the same as saying that we need any new legal forms of enterprise as suggested by Luke Fletcher on the Social Enterprise website (http://www.socialenterpriselive.com/section/features/policy/20120117/social-business-%E2%80%93-the-missing-piece-the-social-economy-puzzle), there are already plenty of ways of creating the right legal forms. It is not types of trading vehicle that are holding back growth but the unidentifiable nature of the underlying enterprise that is the problem.

This manifests itself in two ways. Firstly, it is very difficult to measure the sector, and therefore to judge its overall impact and growth, when its trading vehicles are indistinct from any other. Secondly, it is very difficult for those choosing where to spend their money (state commissioner or individual) to know exactly who they are dealing with. As pure 'show me the money' capitalism finds social enterprise a more serious competitor it can be guaranteed that it will find ways of looking more and more like social enterprise. Whilst I understand all of the arguments about encouraging risk capital by allowing investors to share in the profit of social enterprises, the line needs to be drawn clearly somewhere or it will be possible for anyone to call themselves a social enterprise just because one of their directors bought a Big Issue last week.

This to me is the crux of the problem, and it is especially valid in an age where myriad new social enterprises are being encouraged to bid for state contracts but without any clear structure to support the way that they are to compete. Either the Government has no vision on the subject or its vision is of a huge free for all in which capitalism morphs into whatever it has to look like to retain its share of the business and then runs off with the money as always.

Two things are therefore required, in my opinion. A clear definition of what constitutes a social enterprise and the opportunity (not a requirement) for enterprises which wish to do so, and meet certain criteria, to use a new alternative suffix to Ltd, Plc and LLP. My suggested definition in the Green Paper is "commercial enterprises which trade with defined social goals and which are permanently and beneficially owned by their community" and perhaps they might be designated as SET - social enterprise trust?

On a separate but related subject I am not convinced that mutuals or employee-owned businesses should actually be in this group at all. I struggle to see them a social enterprise, they are just a more homely version of capitalism. Social enterprise should be for the benefit of a wider community and should return a substantial part of its profit to that community in one way or another. I would not rule out employee or investor ownership of a part of such enterprises but it must be controlled and they must be kept away from the main stock exchanges and vulture capitalists by means of their own grouping within the corporate sector. There is a danger that because capitalism has gone to such an extreme we now embrace anything that isn't purely capitalist as a social enterprise. That would be equally wrong and may well let 'free for all' capitalism back in the door to ensure that social enterprise never gets to any useful scale or even dies.

The suggested change would therefore achieve two things: it would provide a stronger platform for investment in the sector, even for partnerships with commercial firms, and it would enable to sector to be measured, rewarded (perhaps through tax or other incentives) and protected. The Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org) goes further and suggests that many of the public sector spin outs should join an entirely new sector which remains in state ownership, but that is too big a diversion for now, we must first clear the fog.

Not long ago we had Lansley and Cameron giving different definitions of what constitutes social enterprise and now we have a push for co-operatives. Although this is welcome I see it as a further blurring of the lines between pure capitalism and social enterprise which can only be to the benefit of the former. Something clearly needs to be done or the cynic in me will have to conclude that Cameron is in fact a double agent - trying to appear #socent friendly whilst playing divide and rule with the sector. In that case the Big Society will have been nothing other than a tool to persuade the poor to help themselves whilst keeping any popular movement toward social enterprise (and its attendant gradual redistribution of wealth) under full central control.

Memo to Nick

Dear Nick

Your recent comments about a John Lewis economy set me thinking. Thinking that you should stop thinking. Of all the harebrained wannabe vote-catchers this takes the biscuit. It will not endear you to voters and it certainly won't win any friends in business. Most importantly it won't fix the economy either.

Despite your ill-researched comment (JLP is a trust, the staff do not own shares), there is evidence that employees with a shareholding in their employer are actually more productive, rather than being 'as good' as you allege. That said, the motivators of those employees are unlikely to be purely financial, and you would need to analyse why they joined the firms and industries that they did alongside what it is that motivates them to over-perform. It is daft and simplistic to assume that giving employees a share in any firm will create anything other than additional paperwork for the employer. Without any other regulation it is also likely that the employer will reduce salaries to allow for any dividend which may be payable.

Overall then this is unworkable and pointless, just an attempt to put a Liberal flag in a corner of the Big Society. That said, it is a laudable aim, in certain circumstances. Capturing the benefit of a more motivated workforce and population is a big theme of the Unofficial Big Society Green Paper, which I am sure, from your comments, you haven't read. You can see more at www.bigsocietygreenpaper.org

In essence there is a way to create the benefits of employee share ownership, widely and deeply across society, without forcing companies to give up shares. Giving people shares, or policies, in a national insurance and pensions fund is one of the proposals in the Green Paper and whilst this fund could own shares in state and social enterprises, it could also hold funds on behalf of, and provide benefits for, the entire population. This would be a widely spread fund reducing the risk to individuals from a corporate insolvency but it would provide the same direct correlation between their efforts and their rewards that you seek from direct share ownership. In that way it would enshrine big society ideals whilst solving the inherent unfairness of the current system.

That has to be a plan worthy of consideration? If so, please let's have a think about it before we announce it.

Best

Gareth

Memo to Treasury

Steve Richards' excellent R4  David Cameron documentary - on iPlayer at http://www.bbc.co.uk/iplayer/episode/b01946pr/David_Camerons_Big_Idea_Episode_1/ - began to explore the internal blocks in government to the development of the Big Society. It struck me just how little the Treasury had put into the concept, both in terms of support and ideas. On reflection this is partly due to the lack of formal policy behind the concept, but it also suggests that the Treasury could be more pro-active in devising ways to support one of the PM's flagship pledges.

In the Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org) I have tried to be as inventive as possible in examining the potential for a truly big Big Society to take on a life of its own. I struggle to see the point of thousands of independent social enterprises, especially in the NHS, where it seems to be more of a backward step to a network of charitable foundations. I do however see the point of social enterprise and can also see that it has the power to energise and engage the wider population, something the Big Society is missing.

I would strongly suggest therefore that you look at ways of using social enterprise to build solid foundations for the Big Society. The Green Paper suggests a complete overhaul of taxation, pensions, health & social care and Government, resulting in an immediate return to a small government accompanied by a much fairer system which will over time support a gentle redistribution of wealth. In the process the Green Paper demonstrates that there are ways of shoring up the banks without Quantitative Easing, and ways of delivering QE which do not alienate your voters by appearing to favour the bankers. Finally, the Green Paper shows that with enhanced and more modern accounting, the budget deficit can be eradicated over the life of this parliament and it suggests better methods for measuring national wealth to evidence the success of these changes.

All in all, it is an excellent time for the Treasury to do some high level scoping of the ways that dramatic change can be used to strengthen our position and in the process build that elusive and truly big Big Society. Mr Cameron will be very grateful, and so will we. You might even get to do another term of government if you get this right.

Happy New Year

Hi Dave

I have read your New Year message and am, well, not convinced. Not that it was any worse than any of the others - you could have all got them at the same shop. I didn't expect any stunning new policies to have been prompted by the jokes from your Christmas crackers but I thought you might acknowledge that something new is needed. Or even that we would review our progress so far and do anything new that looked as if it could deliver more than the current policy set.

Unfortunately, the message from you seems to be to keep faith, to enjoy the Olympics and footie and try to forget that we are poor. If the rest of the world comes to visit we might be able to earn enough money from them to keep the wolf from the door for another year or two.

That's a long shot and will see you out of government if not in the next 12 months then at the end of the coalition, guaranteed. People are bored. They know that capitalism has gone to too with its 'free' market and that government and capitalism between them are squeezing the substantial, tax-paying, population until it is entirely disillusioned with politicians and big business, of all colours and types. This is the way to disaster. Not just for the coalition but for the whole country.

The Big Society, and its commercial twin social enterprise, are not going to singlehandedly drag us out of the mire without some help from you. The Big Society must equal Little Government. The stunning rise in overall taxation over the past 15 years has been largely to drive ever more state spending, much of which is with foreign companies. No other country willingly hands over as much of its turnover and therefore profit as we do. That is why we are shrinking relative to the rest of the world.

I am sorry to harp on about it but the Unofficial Big Society Green Paper took a long hard high level look at our strategic direction and found it flawed. We need more investment, we need a proper national balance sheet, and we need proper national insurance and pension arrangements which are affordable and fair. Creating these, and funding them by the dismantling of the many machines and layers of government, is what will solve our problems.

If you have not done already please read the Green Paper (www.bigsocietygreenpaper.org). I sent you one in early December. It shows how social enterprise, in a new and strategically constructed form, can help to solve all of our problems. Done in the right way, and genuinely for the benefit of the largely silent, tax-paying majority who fund this country, it will energise and engage the people far more than any sporting success or any temporary bubble of income which we gained by spending billions on hosting sports events. It will cure our budget deficit and solve the pensions and healthcare funding crisis.

If you seize the moment to offer people a New Deal as in the Green Paper you will ensure that the feelgood factor of the summer is not transient and you will give the investment in those events a clear cut opportunity to provide a greater legacy than prettying up parts of the East End. A true legacy which enhances national wealth and builds a big society for generations to come. One which tips the poison out of the chalice that we are about to hand to our children, and affords the opportunity to refill it with clean, healthy water.

So please, for 2012, give social enterprise a real chance at capitalism's top table, re-take control of our spending and strategically create a real legacy based around growing national wealth and a truly big Big Society. One in which we all understand our role and the scale of the opportunity.

Happy New Year!

Gareth

Memo to Dave

Hi Dave

Paul Krugman has written an insightful piece on defeatism within the Depression. http://krugman.blogs.nytimes.com/2011/12/27/the-defeatism-of-depression/?smid=tw-NytimesKrugman&seid=auto. I actually see it as depression within Depression, and one with a huge human cost.

Krugman is right, people do get blinkered into thinking that there is no other way and it is a bit scary when he points out that it was WW2 which really dragged the world out of the last enduring slump. A demand driven recovery is obviously the way forward, but an organic one that makes and invests profit, not another bubble and certainly not a global conflict, is what is needed. The thrust of Krugman's piece is that if only government would let go of its prejudices the depression could be fixed within months.

I am not sure about that, it is not prejudices which hold back the UK, and possibly not the USA either. It is deeply ingrained systems which enable the rich 1% to use the effort and money of the 99% to print themselves more cash. It is the attachment to capitalism which requires examination and I am a capitalist. At the moment too much capital leaves the system to easily and for too little risk. The free market is now a free for for all for the elite. In the Unofficial Big Society Green Paper (available to buy at www.bigsocietygreenpaper.org) I have worked to outline an alternative way forward which would preserve the central functions of capital within our system. There will be others.

It would be great if you could begin 2012 by renouncing your admirable but irrational attachment to the status quo and commission a thorough examination of the alternatives before it is too late. The UK has a unique set of challenges and the myriad policies being rushed through fit neither our needs or each other.

A period of reflection and strategic planning would be invaluable and might reverse the depression within the Depression, if not the Depression itself. Whilst I am sure there isn't a quick or painless solution, I am equally sure that unless we start doing the right things, and quickly, decline is inevitable. The UK has to behave more like a business. That means investing for the future, living within our means and energising the population to success through a clear strategic plan. The alternative is a bigger and bigger black market (paying less tax), more people excluded from society and an eventual breakdown of that society along with a complete loss of our global position.

Gareth

Memo to Dave

Good morning Dave,

A difficult week at the EU then! I'm not sure Nick is as close behind you as you think, and friendly fire can be more dangerous than any enemy, so remain alert. That said, I think no-one in Europe believed we would use the veto. As a result they piled a load of anti-British moves into their supposed Euro rescue, which is of course nothing of the sort. It is an instrument of further control which is supposed to persuade the loony fringe to behave more like Germany. Which would be fine if they had any industry or exports and wanted to work like Germans at the expense of having a life. They don't, they never have and I can't see them changing. The Euro as it stands is therefore just as doomed as it was and we are best off out of the way. We will probably suffer more than the euro zone if it collapses, as they will just create a new currency at a rate favourable to them ruining our banking system (again), but giving them our financial system as a condition of helping them to clear up their own mess was clearly not something we could agree to and so they can do what they like. We can always print some more money to further devalue the £ if we need to.

This leads me to the ticklish subject of solutions. Clearly the Euro is still flawed, and clearly the puppet dwarf wanted you cornered. There is no way you could have gone with the proposals and Sarkozy knew it, possibly even planned it. Also, we do not know to what extent Merkel is pulling his strings. That is fine, every now and then you have to point out to people that you are prepared to stand up to them, but to really end the bullying you also have to give them a slap. Metaphorically speaking.

The end result so far is that we are excluded from a group which has already revealed that it wants to take business from the UK and make it sit within their countries. This is not what we meant by a single market and we clearly need to get back on the high ground if we are to carry on the fight. I agree with you that London's status as a financial centre is key to Britain's success. It is key to inward investment as well as a revenue earner in its own right. It also has the long term potential to build relationships with the new powers which will in turn drive business and revenue to us. That is why the rest of Europe want our dominance broken up.

However, on the whole I think they have played an obvious hand to extinction. They haven't thought it through to the end. Voices in Germany are saying that if we want to sit outside the Euro we should also sit outside the EU, using Switzerland as a model. Do they really mean that? Switzerland is rich, well-invested and happily neutral. It has a sound banking system and punches way above its weight. If the UK could be like Switzerland and it requires being out of the EU and the euro to achieve, bring it on!

Of course, what the Sarko/Merkel alliance have overlooked is that we are bigger and more dangerous than Switzerland. We have some international trade of our own and a platform on which to build whichever way we choose to go. That is an important phrase - it should be us who choose which way to go. Now that you have been cornered by the dwarf and his mates, who clearly thought they had you over a barrel, if I can mix those two metaphors, they have left you with no choice. Clearly, their next move will be to enact measures harmful to the UK to try and force you back to the table, cap in hand. We cannot afford to wait for that.

Instead, put Europe in play. Carefully and strategically. I dare you.

You are already aware that if you held a referendum perhaps 70% of those who voted would be in favour of leaving Europe. The dwarf knows that and so it must be built into the plan. This will also have the side effect of vastly increasing your credibility with UK voters although I am sure that you would not see that as a  reason to act in a certain way! Here's what you do:

1. Acknowledge that the world is now a very complicated place and that no real 'public' review of Britain's EU membership has ever been carried out.

2. Form a body, composed of eminent economists and businessmen to spend a period, perhaps six months, fully reviewing all aspects of our EU membership and of the alternative.

3. Task them with publicly delivering a fully referenced and researched report, perhaps some kind of balanced scorecard as well, with no recommendations, only numbers.

4. This is important. It must not have recommendations, It is not a review of whether we should be in or out, it is a review of the economic and financial costs and lost opportunity of being in or out, which draws a financial conclusion only. It is not a political document, it is a financial one.

5. It must capture as far as possible all costs and do so on a menu basis so that as things change, for example they remove from our banks the ability to trade Euro derivatives, we can re-assess quickly and easily.

6. The Report must be in the form of a 10 year financial forecast, perhaps with alternative scenarios, so that a fair estimate can be made of our chances of growth both in and out of the EU.

7. Promise the people of the UK now that if the cost of staying in is greater than the cost of leaving that you will immediately call a referendum on the subject. Or reduce our contributions/limit our losses to restore the balance.

8. We all know that such reports can be twisted to a variety of outcomes, but for the good of democracy let us for once do some proper research and share the outcomes with the people, even if they do need some help to make the right decision.

Alongside this you will need to say to our EU 'partners' that you have been forced into a course of action which may lead to you having to make an entirely new offer to them around our membership. This is because all of the others only assess their membership on the basis of what it does for them. We were one of the few countries to genuinely subscribe to the view that a growing and stronger Europe will be better for all of us and we were therefore prepared to contribute. What we have now seen is that a stronger Europe will eat its neighbours when it suits. We are clearly on their menu and the best defence will be attack.

The EU may well spend a period wondering if we will be in or out. That will be good for them. If we decide to stay in after this review it will be because it is best for us or because we want to, accepting that the cost is a price worth paying despite the risk of mugging. If we decide to come out, the report mentioned above will form the basis of a set of benefits which we must set out to capture. We will need a taxation and banking system which is highly robust and ideally provides tax breaks to EU manufacturers, banks and services coming here. We will need investment in our own infrastructure and trading systems, such as those discussed in the Unofficial Big Society Green Paper to control flows of capital, and we will be able to relax laws. Not all of them, and not ones that affect quality of life (especially in working conditions), but ones that we all see add cost and decrease competitiveness. The ones that will have been identified as contributing to our cost of membership in the Report suggested above.

This might sound drastic, but we have yet to see what the EU plan to do to save the Euro, apart from to try and cripple London as a financial centre. We need our own plan and they need to know that we have one. Once the full scale of what we could achieve as an independent nation, right on their door step with tax breaks and new financial instruments and incentives to do business here through less red tape, is clear, the Sarkozy group will be less so. Cosy that is. It might even begin to be apparent to them that to attempt to mug us in such an obvious and brutal way was less than wise. We need to show them that they need us as much, if not more, than we need them.

That in a nutshell is this week's challenge. To turn the tables on them until they regret their actions.

Bon chance!

Gareth