Opportunities for innovation – even in the depths of recession

Despite what many people might think and although many previous financial crises have turned into economic, social and political ones, crises are often a time when new possibilities arise. Downturns often bring radical institutional innovation, for example it was the depression of the 1930s as much as WWII that led to the creation of the welfare state and the NHS. The Young Foundation have just produced a paper which suggests some ways in which the VCS, governments, local authorities and businesses might be able to mitigate the recession and where possible turn crisis into opportunity. The paper is a work in progress so if you really agree or disagree with some of the suggestions or have some better suggestions or examples, now’s the chance to add some thoughts or comments to influence its development.

Implications of the recession

 

Most of the direct effects of the recession are fairly predictable and we have covered these on this website regularly: fewer jobs, lower tax revenues for government, more demand for services etc. But the paper also outlines some more complex impacts which organisations may find help them to think through what the implications of the recession will be on their organisation and the people they work with.

  • Repossessions/mortgage arrears/homelessness - would be expected to rise but lower private rent levels can also ease housing pressures for some.
  • Birth rates usually go down – but downshifting could be accompanied by rising birth rates.
  • School education, university education and staying on goes up.
  • Stress goes up– both because of debt and job insecurity.
  • Mental illness might be expected to rise (male suicides rose in 1980s Britain) – but in past recessions many places (for example Finland) didn’t experience worsening mental health amongst vulnerable groups, in part because of differing responses that provided a buffer to them.
  • More pressure on marriages as a result of financial pressures and stress – but more divorcing couples have to stay in the same house (another factor leading to worsening domestic violence).
  • There is likely to be less consumption, more cost-aware consumer
  • spending, and also in some instances less damaging consumption, such as binge drinking, but hard drug use and alcoholism can rise as they are used as a coping mechanism.
  • There is likely to be higher crime in some categories including property, but this also potentially comes alongside declines in the types of violence associated with drinking.
  • Re-offending is likely to rise (as former prisoners find it harder to get jobs).
  • Public disorder and community cohesion tend to worsen, particularly where there are many unemployed young men, and underlying racial tensions.
  • Immigration is likely to fall – there have already been big outflows from the UK and there is speculation that levels of migration to the UK may fall sharply as a result of the recession or that foreign workers may return home.
  • There is some evidence that levels of physical health can improve during recessions (as they did during WW2) as people eat, drink and smoke less, though there is also very recent evidence of rising consumption of cheap junk food.
  • Places are likely to be differentially resilient –poorer communities with high levels of social capital and mutual support may cope better than better-off areas where debt is high and there is a lack networks of support (whether from the family, neighbours, well-established community institutions or other sources). People will return from the private to public sectors, both as users (eg in health - hence waiting list pressures), and as potential employees.
  • Behaviours are likely to harden – e.g. banks, tax authorities and housing associations become more aggressive in collecting money (which can precipitate problems).
  • Policies will shift – labour market policies, for example, shift to the more employable newly unemployed, and social policy tends to pay less attention to the most at risk.

Strategic options for the future

 

There is no doubt that the government has tried acted to protect people, businesses and VCOs from the effects of the recession but how sustainable are these measures? The paper argues for a greater emphasis on resilience as well as protection and argues that traditional industries should no longer monopolise these responses. Most available evidence suggests that the biggest employers of the next decade will be in health, education, care, environmental services and tourism. Yet recovery plans have been primarily focused on sectors with smaller shares of employment and that are likely to further shrink in the years ahead. The VCS is more likely to grow jobs than retail banking. VCOs, communities, family and informal networks are likely to be increasingly who people turn to which suggests many opportunities for innovation. The paper proposes some strategic options for response which try to, wherever possible, combine economic impacts with social ones. These are illustrated by examples from across the world where innovation is already happening. I’ve summarised some of the main suggestions and examples here:

  1. Financial products that achieve multiple goals, for example, providing mortgage lending credit on the condition that those taking loans commit to making energy efficient improvements or micro-renewable to their homes (most ‘green mortgages’ tend to be optional. Recovery plans could also enhance health as well as promote green jobs; combining both health and environmental goals, eg. Adapting cities to walking and cycling.
  2. Radical innovation for old-age support as societies are largely not prepared for an ageing population. We will need systematic investment in new kinds of housing models (for example clusters of homes and direct provision) and new kinds of service provision with volunters, home helps and concierges, as well as new uses of technology to support self-management and mutual. supportmyparent.com is one example of this.
  3.  Localisation to mobilise local creativity and capacity. In other countries, action has been mainly led by cities, states and provinces as a result of greater powers, larger tax bases and more confidence. However, we have seen some UK local authorities respond with a wide range of actions, for example Wakefield council have agreed monthly payments of council tax based on what people can afford and are sending daily reminders to prevent arrears being built up unnoticed. Does this suggest a move to an age of more mutual trust and support?
  4. Open funding proposals - The Department for Work Pensions’ ‘Right to Bid’, allows anyone to submit a proposal for funding a project or programme that meets the department’s objectives. This is an interesting experiment which may, for example, unlock some intra corporate training capacities, or creative proposals from local authorities for helping people back to work. Maybe this is something that the Office of the Third Sector might want to think about to encourage creativity and innovation?
  5. Community assets and localisation - The fall in property prices provides the opportunity for creative use of properties, ensuring that assets are used rather than removed from the market temporarily, as well as acquiring land for public or community use like on the model of Coin Street, which was given to community ownership in the recession of the early 1980s. Or the “Take back the Land” campaign in the US where vacant repossessed homes are made available to the homeless. Another suggestion is to turn over empty high street premises to become training centres, potentially staffed by groups of graduates, with networks to make the most of combinations of face-to-face learning and on-line learning.
  6. Greater engagement in civic and democratic institutions. At a local authority or ward level, Civic Action Forums could bring together residents, local workers, business owners, people involved in local voluntary or faith groups, school governors, councillors and Members of Parliament to work on local responses to the recession.
  7. More funded websites to mobilise public engagement (‘pledgesquads’) encouraging people to promote ideas for beating the recession; allowing others to comment and adapt; encouraging volunteers to pledge time (subject to others pledging); and encouraging funders to do the same. With help from social networking technologies it is now much easier to mobilise collective intelligence, as well as the resources being discarded by the market. For an example see Hophive which aims to help people engage in their local community.
  8. Local food production, energy ownership models and time banks. Time banking may allow people to exchange local skills and complementary currencies which could be an important way of insulating, maintaining care and fostering mutual support in communities affected by the recession. There is a long history of creativity around parallel currencies, often accelerated by recession. The urban agricultural movement is also spreading fast, for example Capital Growth, and localised energy has become a priority for many cities, partly in response to volatile energy prices.

What are your opinions on these suggestions for how communities, individuals, the VCS, public and private sector can work together and make the most of opportunities in the current crisis? Do you know of any places, in the UK or abroad where innovative responses to the economic crisis are being developed? Please add your thoughts here to influence the development of the paper.

Last updated at 14:03 Wed 10/Jun/09.
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Kathryn's picture

Kathryn

Third Sector Foresight

One of the proposals brought out in this paper is “Radical innovation for old-age support”. I think this links into the new driver we’ve created exploring the role of telecare.

Would you class this as radical and innovative? Or is it only really a step in the right direction?

What innovation would you like to see in how our older population is cared for?

Kathryn's picture

Kathryn

Third Sector Foresight

I love the optimism of NESTA’s radical efficiency report, released last month. If there are examples of public services being delivered at lower cost, because of radical innovations, why can’t they be adopted more widely they ask? If you look beyond the possible naievity of this, there is as I said, delightful optimism. Reading their report, I found the examples they give were heartening. If you work in the voluntary sector or public service delivery I would recommend reading it just for that! Quite nice to discover on a drizzly Monday morning.

However, warm fuzziness aside, what does their report bring to the public service delivery debate? The LSE blog rather bitingly comments that more is needed than just using

‘best-practice research’ to collect case studies of what has sometimes worked, somewhere else, in another society,

As suggested in its title, this report is focused on innovation and innovative responses to cuts and the need to deliver differently. I wrote about people’s potential to innovate when necessary a year ago and it’s actually echoed here when the LSE blog says government tends to bring innovation out for a rainy day:

Previous research has found that Whitehall departments tend to store up innovations in their back pockets and not take action on them, until a ‘rainy day’ crisis turns up and requires that they absolutely make some response.

So if the innovation, or responses, is sufficiently radical, as suggested in NESTA’s report we would be looking at a whole new way of delivering services. Which I think we’re all aware holds massive potential for civil society organisations.

The old chestnut remains however: will this re-envisioning actually take place? NEF have been calling for a long time for a new way of responding to the Triple Crunch; as CPLS points out, much of this agenda was spotlighted in 2007. Will it just be more shouts in the darkness this time round? What do you think?

No time to read the whole report? Have a look at these responses: CPLS blog; LSE blog response. You might also be interested in the NCVO work on innovation; and a previous post around innovation in times of fiscal tightening.

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How will this affect your organisation? Have you considered it during your strategic planning? Can you share any interesting relevant links?

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