Part of the government’s new plan to mend what it has branded “broken Britain” is the idea of incentivising private firms and charities to work directly with problem families. One source suggested it would be a payment by results system backed by millions of taxpayers’ money.
There are an estimated 120,000 problem families costing the public purse £9 billion a year – or about £75,000 per family once benefits, health and crime costs are taken into account. The plan is part of the response this summer’s riots but in truth the long-term social cost dwarfs the financial cost with children often locked into a downward spiral of truancy, social care and crime.
Although details of how payments to private companies have yet to be outlined, one important point the new Troubled Families Team needs to take on board is the simple idea that ‘small is beautiful’. By this I mean that small and micro companies are often those with the closest ties to their communities and who are best able to act as a bridgehead to get people from less advantaged backgrounds back into productive work.
A report by the Federation of Small Businesses back in 2008 highlighted this phenomenon and urged stronger government support. It concluded: “From the evidence reviewed it would seem that small firms are much more likely to have a larger percentage of their workforces made up of individuals who may be considered as facing a variety of disadvantages in the labour market.”
Small companies tend to have closer ties to their neighbourhoods making it important to be seen giving as well as taking. Owners are often hands on with less formal employment and recruitment procedures, allowing the flexibility to take people on in jobs when larger companies with more rigid procedures may not be keen to take the same risks when they have other blemish-free candidates.
The small business sector really is an economic wonder that needs to be nurtured. A study by Nottingham University last year looking at the decade to 2008 revealed that small businesses – those employing less than 100 people – were likely to create almost two-thirds of the country’s new jobs in an average year.
It showed the relentless ‘churn’ in the market with about 47,000 private sector jobs are lost each week offset by 53,000 new jobs. While services expanded overall, manufacturing is the biggest loser with a creation rate of 10 per cent against a destruction rate of 13.7 per cent, with the North East, West Midlands and London worst affected.
There is now an acknowledged need to help rebalance the economy back towards manufacturing and away from our reliance on the financial sector. Wouldn’t it be great if that went hand in hand with equipping underprivileged families with the skills and resources to also dig themselves out of their own spiral of decline?