Social Enterprise and levelling up to an inclusive and sustainable economy for central southern England

This is a guest blog by John Merritt, a Director of Social Enterprise Link (Wessex). John was born in Hampshire, started work at 16 and spent most of his working life in three industrial sectors. The Royal Navy and Royal Marines, including tours of Northern Ireland (1981) and the Falkland Islands (1982). Social Work with Runaways and Looked after children and then in the Co-operative and Social Enterprise Consultancy and Training sector.

John has a degree in Politics and Sociology and a MPhil (Social Sciences) from the University of Southampton. He is a level 5 qualified Social and Co-operative Enterprise Development Practitioner and has a Diploma in Social Work.

John has been a long time activist in the labour, cooperative and trade union movements and has been on the Board of the Association of British Credit Unions (ABCUL) and is on the Board of ERIS (European Research and Information Service) as well as a Worker – Director in Cooperative Assistance Network and in Social Enterprise Link (Wessex) CIC.

The content of this post is solely the opinion of the author and does not necessarily reflect the opinions and beliefs of the Southern Policy Centre.

Social Enterprise and levelling up to an inclusive and sustainable economy for central southern England.

Social Enterprises have a relatively limited profile amongst the general public and people working in the private sector. This is despite the success of high-profile Social Enterprise organisations such as The Big Issue, Change Please and the Eden Project and the existence of well-known product ranges such as Fair Trade, Belu Water and Zaytoun Olive Oil being produced by Social Economy Enterprises.

While there is a growing demand from public sector commissioners and some private sector procurement teams for their contracts to commission to Social Enterprises, there is a relatively low success rate for this to happen for reasons I will look at later.

To get a better picture of the challenges and opportunities I want to take you through some issues Social Enterprises and their would be customers and clients face. I’ll explore why this matters to individuals, businesses, the local economy and the environment and suggest some actions you could take to help make a positive difference in the central southern England social economy.

First, a few key statistics will help shed light on why we should be looking out to invest in, buy from and work for Social Enterprises. These are taken from the Hidden Revolution report (1)  which shows that Social Enterprises are economically significant: they are better than what we traditionally regard as the  “private sector” for inclusivity, new growth, innovation, economic sustainability, increasing local economic turnover, providing more equal rewards for employees, providing social benefits to the local community, and are committed to environmental sustainability.

Here are some numbers from the report;

  • There are over 100,000 Social Enterprises throughout the country contributing £60 billion to the economy and employing two million people
  • Over 40,000 of these enterprises are led by women, over 12,000 are led by people from the BAME community and over 36,000 have a Director who has a disability
  • 47% of these enterprises grew in the last year compared to 34% of conventional enterprises
  • 25% of Social Enterprises are under three years old, which is three times the proportion of start-ups compared to other businesses (8%) and only 18% of social enterprise start-ups close within 5 years compared to 52% of private sector start-ups.

Social Enterprises have a multiplier effect on the money in the local economy as they have no external shareholders. Wages are spent on local employment, purchases are preferably ethically and locally sourced, and surpluses are re-invested in the social or environmental mission which guides the organisation. As the New Economic Foundation point out, if a “higher proportion of money (is) re-spent in the local economy (there will be) a higher multiplier effect because more income is generated for local people. More income retained locally, or nationally, means more jobs, higher pay and more tax revenue for government, all of which may lead to better living standards”. (2)

The number of Social Enterprises introducing a new product or service in the last 12 months stands at 50%. Among other conventional SMEs it has fallen to around 33%. These figures are indicative of a vibrant sector that puts more into the well-being of workers, citizens and the economy for the same cost as other sectors. So what are the barriers and why aren’t we all buying from, working in and trading with Social Enterprises?

In their 2018 report referred to above (1) Social Enterprise UK said “Reforming capitalism to ensure that our economy works for all is at the top of the political agenda, and we believe the Social Enterprise sector holds the key.” Here is a big ask, you might say. Reforming capitalism makes turning around a tanker look like a piece of cake. Resistance is deeply ingrained in many economists, educators and the psyche of business and the general public. There is constant piecemeal reform, but as the events of the past 50 years or more have shown, there are breaks in reform and even reversals. The impunity of the unfettered free market keeps raising its head and the commitment to social and environmental well-being are still largely a matter of ‘social responsibility’ rather than legislative necessity.  Those advocating for the free market raise some very important social questions: “Can we afford a national health service free at the point of delivery?”: “Can we live without new oil fields?” or “Can a company afford to employ people on a decent wage?”

Government intervention is essential but some of that investment is causing social and environmental problems, for example, the heavy investment in fossil fuels, unhealthy social and environmental projects, and supporting some socially and environmentally damaging practices. Moreover,  some companies ignore the law or try to get around it. But tackling avoidance of the law and or re-focusing government investment is not the be all and end all of the reform and change is needed.

We should use our personal wealth and, if we have the ability, our corporate wealth to invest in, commission or buy from and support in any way we can, Social, Co-operative, Mutual, Employee owned and similar enterprises. We need to democratise finance and corporations, i.e. to reform from below as well as from above by using our consumer power, investor power, voting power, time, energies, communicative powers any other resources you can muster to bring about capitalist reform. Credit Unions and a few Community banks enable money to work differently. Hundreds of Mutual Aid groups were established during the pandemic and community groups wanting to become co-ops and Social Enterprises keep emerging. These all need our time and money to help nurture them. 

Social Enterprise Link (Wessex) CIC (3)  has been established to support the Social Enterprise sector, helping start-up Social Enterprises and social entrepreneurs in ‘Wessex’, as well as mobilising the collective strength of the ‘social economy’. Research into the sector locally is limited, but our own research indicates that in central southern England, it accounts for over £1,000,000,000 of the local GDP, employs over 5000 people and adds significant economic, social and environmental value by working and trading with a driver of social and environmental purpose.

Social Enterprise Places (4) are a key marketing vehicle across the UK to the public. Local Authorities, LEPs, Universities and other partner organisations invest as they choose, so the marketing and investment landscape is very uneven across the UK. For business, the Buy Social Corporate Challenge (5) is a means of increasing commissioning awareness and this too has resulted in hotspots for social enterprise activity.

If you are interested in finding out more about the opportunities for putting money, time and energy into levelling up and reforming capitalism from below, keep searching websites, newspapers and social media groups for a Social Enterprise. The evidence of the past 20 years shows sustainability, levelling up, inclusion, innovation and making social and environmental well-being a business purpose, rather than an option that businesses decide whether they can afford, is best served by Social Enterprise. Maybe it’s worth following that evidence.

John Merritt

Director, Social Enterprise Link (Wessex) CIC

July 2022