Social Enterprise

Lord Wei Excerpts

Thursday 6th October 2011 Lords Chamber

[Lord Wei]

My Lords, I, too, thank the noble Baroness, Lady Andrews, for tabling this excellent debate, and declare an interest as an adviser to the Community Foundation Network. Given the limited time we have in this debate, I will not dwell on definitions, even though the term “social enterprise” does differ, depending on whether one uses the more narrow legal definition based on percentage of income earned, or the broader sense of the word, which comprises more a sense of solving social problems in an entrepreneurial way. I prefer to use generally the term “social venture”, which explicitly encompasses both definitions.

There is much about government policy on promoting social enterprise that should be welcomed. Here I must declare an interest in having had a hand in developing some of it. It is particularly pleasing to note that while traditional volunteering and giving may be on the wane, social enterprises have been starting up at an explosive rate since the election. I believe these two trends are actually two sides of the same coin; as we age and as technology changes our lifestyles, it is not surprising that traditional attitudes to giving and volunteering, in which money and work may have tended to be handed over to professionals, are on the wane, and more and more people, old and young, want to give of their time and money in a more hands-on, technologically enabled—that is to say, convenient and, indeed, entrepreneurial—manner. Social enterprises or ventures will be the likely beneficiaries of such a shift.

Social enterprises facilitate all three parts of the Government's programme of sharing greater responsibility for tackling social problems with citizens, otherwise known as the big society. Social action, community empowerment and public service reform are all made possible through social ventures, and the Government have recognised this, for example through their national citizen service programme, which seeks to engage young people from widely different backgrounds in serving their communities, often through social action-orientated social ventures, or their programme of training community organisers who can help citizens locally develop social enterprises as a means of addressing neighbourhood issues, or through the big society capital wholesale fund, designed in large part to help social enterprises to achieve the scale needed to help compete for and then deliver devolved public services.

However, despite this great start, more could be done in each domain to encourage social enterprises to thrive. In the area of social action, for example, there needs to be more follow-through on implementing the recommendations on barriers faced by social organisations, including social enterprises or ventures in the report from the noble Lord, Lord Hodgson, Unshackling Good Neighbours, such as redrafting guidance from government departments that can be written in too risk-averse a manner, causing many smaller organisations to be overly fearful of liability and causing them to incur unnecessary costs that they can little afford.

In the area of community empowerment the Government need to encourage a more consistent treatment of social enterprises by local authorities and front-line officials, which in my view have a very wide range of attitudes to the role of such enterprises locally across the country. In some places, social enterprises are seen as a valued part of the local ecosystem and supported well, whereas in others they are seen too often as a quick way for the local state to offload assets. One low-cost way of achieving this better understanding of social enterprises in the public sector that I have come across is encouraging leaders from the public sector to work in the offices of social enterprise leaders, and vice versa, for parts of their week, which can often help to increase understanding of the challenges and strengths of each others' models and ways of operating, which can then lead to more nuanced policy and co-operation at a local level.

In the domain of public service reform, there remains a real need to create more of a level playing field in commissioning based on social value, as articulated in Chris White’s Private Member’s Bill, which was also mentioned earlier. Officials should desist from trying to water down provisions in the Bill for fear that they might complicate tendering processes or lead to economically inefficient decisions. On the whole, seeking social value does not, in my view, have to complicate or render commissioning decisions uneconomical. Rather, good commissioning should always seek to balance complexity and simplicity in the short and long term. Sadly, too much commissioning today seeks to go for the overly reductionist and short-term answer, which too often in turn leads to a lack of the originally desired outcomes and longer-term costs because best value principles were not followed. It is disappointing, for example, to see organisations such as Surrey Community Health not winning tenders and to see the lack of successful bids, so far, from employees in the NHS to form mutuals, which has a lot to do with the way in which commissioning is currently configured.

I believe that the Government have made a good start in supporting social enterprise and ventures in what are financially difficult inherited circumstances, but the pace has definitely slowed. The Government now need to show how they, too, can be socially entrepreneurial and implement further reforms to build on that strong start—not succumb to timidity or be stymied by bureaucratic roadblocks. To achieve this, they could well do more to work with the likes of community foundations, which are experts in facilitating the start-up, scaling and, increasingly, the turnaround of social enterprises up and down the country. Indeed, the community foundation movement covers about 97 per cent of the country.

I know from personal experience that there are parts that government ultimately cannot reach and I encourage social entrepreneurs, public servants and commissioners to work with their local community foundations to overcome the barriers that they face in helping to support the social enterprise sector, so that the many promising existing and newly started social ventures can continue to thrive, expand and collaborate, forming together a full part of the ecosystem of players needed, now more than ever, to strengthen our society.