Voluntary sector - immune to producer capture?

Is the voluntary sector immune to producer capture? I thought about this question when reading the other day the views of veteran film maker Ken Loach. The director of Kes, Raining Stones and countless other powerful pieces of social realism, was urging people not to donate to the homelessness charity Shelter while it was in conflict with its own employees over plans which may worsen the terms and conditions of some of the charity’s staff. In defending the action of Shelter management, its chief executive, Adam Sampson (a recent speaker at RSA), said 'People give us money not to benefit our staff but to benefit those we were set up to serve - the poor, the vulnerable, the homeless - and my moral and legal duty is to use that money as efficiently as possible’.

‘Producer capture’ is one of the key concepts imported by New Labour from the nostrums of neo-liberal economics. It describes the process whereby the goals of an organisation reflect the interests and prejudices of its employees (the producers) rather than those it is supposed to serve (the consumers, customers or citizens). More precisely, given that workers in a customer-friendly organisation will see their own interests served by serving the customer, capture is evident when producer interests are not aligned with those of the consumer and it is the former that predominate.

New Labour reformers in large part accepted the neo-liberal charge that public services – sheltered from the disciplines of competition or profit – were prone to producer capture. This insight contributed to some of New Labour’s most important public service reforms. It also legitimised rhetoric critical of public employees. This rhetoric (remember the ‘scars on my back’?) also contributed to the public service morale problems which have plagued this Government despite extra investment and higher public sector pay.

I am often asked to speak on issues relating to that nebulous concept ‘the third sector’. With all the major parties taking every opportunity to sing the praises of, and make more promises to, the third sector I feel honour-bound to challenge the consensus, arguing that the voluntary sector is as prone to producer capture as the public sector.

If you were to plot the sectors as lines on an axis of producer capture, I suspect the voluntary sector would be the longest. In other words the third sector contains both the least producer captured and the most producer captured organisations. The former would include small community based groups run on a shoestring by low paid employees and volunteers while the latter might include (naming no names) well-heeled high status NGOs that have managed to make themselves almost immune to any tough questioning about the actual impact of their work. A trustee of one of these organisations recently described to me spending a whole day being shown round its offices before eventually bursting out in exasperation ‘the offices are great, the staff lovely but when am I actually going to meet a client?’.

If this was an essay not a blog post I could spend more time exploring producer capture in each sector. It is, for example, a difficult concept to apply to the private sector. Last week many people were outraged at the profits of energy companies at a time of rising prices and fuel poverty. But many of us complaining are also shareholders in these same companies through our pensions funds, life insurance or savings. So where does the producer interest lie? This is, by the way, one of the issues we will be exploring in our Tomorrow’s Investor project (for which we’d love another sponsor or two!).

For now let me end with a plea to avoid ‘sectorism’. The private, public and voluntary sectors are different in systematic ways, but it is more obfuscating than illuminating to ascribe any characteristics, including producer capture, to a sector as whole.