Member News
By Baroness Andrews - 5th October 2011
Baroness Andrews calls on the government to promote social enterprise to help contribute to economic recovery and public services.
The debate on social enterprise (SE) in my name on 6 October is an opportunity to press the government on its proposals for promoting social enterprise in terms of its potential contribution to economic recovery and better public services.
This country is a world leader in recognising the unique possibilities of social enterprise and developing a range of models over the past decade.
The current government raised high expectations by pledges to support social enterprise, particularly to deliver better social services. While social enterprises are currently outstripping SMEs in the rate of growth and employment, many are now on a knife edge. As public sector cuts bite, contracts are being cut, lost and withdrawn, and grants are lost. If immature commissioning is not addressed the result could bring massive job losses in those social enterprises working with, or affected by, the public sector.
Moreover, such opportunities that exist are being lost. Social enterprises are undercapitalised and under-supported and public sector procurement does not take sufficient account of social value. In sectors such as welfare-to-work and health, social enterprises cannot compete on their own terms with major companies in the private sector. Big Society Capital and Social Investment Bonds will not level the playing field, or solve the structural problems. Nor will they, on present evidence (cf. the Peterborough pilot), generate additional private investment.
The banking crisis has created problems of investment for SMEs which are magnified across the social enterprise sector. Every day social enterprises are being turned down for loans by banks. It's no good Francis Maude talking of one in six employees working in public sector mutuals by 2015 unless the government is willing to intervene to enable the sector to succeed, i.e. to incentivise banks to lend to SMEs; to create incentives and steer resources, advice and skills into the commissioning bodies; and to spread good business practice in the SE sector itself.
I shall be asking, specifically:
• When will the Mutual Support Programme announced by Francis Maude in November 2010 materialise, and what will it consist of?
• When will the National Programme for Third Sector Commissioning see the light of day? What is holding it up and why? And what will it look like?
The government is desperate to convince the country that it has a strategy for growth. Will it then enable social enterprise to help restart the engine now, or will it wait until it's too late?
Kay Andrews was policy advisor to Neil Kinnock and founder of Education Extra. She was raised to the peerage in 2000 and sits on the Labour benches.
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