Thought Leadership

After weeks of waiting, we now know what the new Government is going to do to help social enterprises, and other businesses, through the winter and the current energy crisis.   Here is a quick analysis of what all the announcements mean for social enterprise and what the next few months could hold for our sector. Energy price cap All businesses, voluntary organisations and public sector organisations who are on a non-domestic contract, a fixed price contract agreed on or after April 1st 2022, in the process of signing new fixed price contracts, on deemed/out of contractor variable tariffs or on a flexible purchase or similar contract will see a general discount applied to their bills. A price has been set for energy at £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas. A comparable rate will be set for Northern Ireland which is in an energy market with the Republic of Ireland. This rate compares with the expected whole cost of energy of around £600 per MWh for electricity and £180 per MWh for gas. So the announcement represents a significant discount. However, it is important to bear in mind: Your energy bill will still be going up – although the discount will substantially reduce the increase, bills will still increase. To give a sense of the change, the FSB calculated that the cost of electricity for businesses had increased by 349% between February 2021 and August 2022. Energy bills may still double compared to the previous year and it is worth planning accordingly. Your bill is also determined by how much energy you use, if you use more energy this winter for whatever reason, it could be higher still. This support is only due to last for six months – there is no guarantee that this will continue beyond March 2023 and you should plan accordingly. SEUK is calling for an extension until the energy crisis passes, but there is no clear indication from government whether it is going to listen to that advice. Energy bills are not the only things driving inflation – supply chain pressures, higher costs of materials, the fall in the value of the pound relative to other currencies and higher wages will all feed through into inflation. Inflation may be slightly lower than expected due to this announcement but is expected to be at historic highs for many months to come. Tax cuts to encourage investment and spending The “mini-budget” has also seen a number of tax rises cancelled that would have affected social enterprises. National Insurance – the national insurance rise of 1.25% has been reversed and the Health and Social Care levy has been cancelled. This will reduce the cost of employing staff, often one of the biggest costs of running a social enterprise. Corporation tax - the cancelling of the planned rise in corporation tax will mean that social enterprises generating distributable profits will be taxed at a lower rate than they otherwise would have been. For social entrepreneurs depending on the dividends of their business for income, this will provide some relief. Annual Investment Allowance – the annual investment allowance (the amount of corporation tax you can write off due to investment in plant or machinery) has been increased to £1m. This will help any social enterprises planning to make significant investments in physical capital over the next few years. Alcohol Duty – frozen for one year from February 2023. This will avoid any tax-related price rises for social enterprises running bars, pubs, restaurants or other venues selling alcohol or social enterprises which host events with alcohol. From a cash flow perspective, most of these measures are unlikely to have much effect (bar the National Insurance Cut). Cuts in corporation tax or increases in the annual allowance are good if you are generating distributable profits, but otherwise unlikely to provide significant help. There will be another Budget later in the year, however, where further tax or spending changes may be made. We will continue to ask for further targeted support to help the cash flow of firms, particularly around employment – which can help ease cash flow and support trading. Reforecasting and replanning Like all businesses, social enterprises will be reforecasting their budgets and developing new plans based on the announcements made and the general economic conditions. If your social enterprise faces financial distress, the most important thing is to speak to your clients, customers and networks as soon as possible. Funders and supporters may be able to help you, or you may be able to negotiate relationships with your clients or customers that reflect the new reality. The worst thing to do is wait.  Social Enterprise UK will continue to run webinars and provide information on ways that can help your social enterprise over the difficult period ahead. Keep an eye on your emails for these events and get in touch if you have any concerns.  A bumpy road ahead At the time of writing there is significant instability in the markets about these announcements and it is very likely that social enterprises are going to face an uncertain eighteen months. Has the Chancellor done enough to avoid recession? Will inflation come down next year? How long with the energy crisis last? These are questions we simply cannot answer. However, social enterprises have shown themselves to be incredibly resilient businesses over the past decade. Austerity, Brexit, COVID and now the energy crisis – it has never been easy running a social enterprise. At Social Enterprise UK we will keep doing what we can to champion our sector, call for targeted support to help the communities we serve and support social enterprises as best we can. Sticking together we will keep working for a fairer society and a greener future.

26 September 2022 A group of 30 large companies have spent over £250 million with social enterprises by bringing them into their supply chains through Social Enterprise UK’s Buy Social Corporate Challenge. Launched in 2016, the Buy Social Corporate Challenge was set up to encourage corporates to use their everyday procurement spend to create positive social and environmental impact. Starting with seven founding partners the programme has grown to include 30 large businesses ranging from pharmaceuticals to finance who have collectively spent £255 million with social enterprises in the last six years with the overall goal being to get to £1 billion spend by 2026. This quarter of a million spend with social enterprises is one of the key findings in the Year 6 Impact Report of the Challenge which is published today (26 September). The report also shows that the money spent by corporates through the programme has helped create 2,700 jobs and has helped social enterprises increase their impact and access new markets. Through trading with Buy Social Corporate Challenge partners social enterprise suppliers have been able to reinvest approximately £26.5 million into the social or environmental missions. One of the 1,030 social enterprises who have supplied Buy Social Corporate Challenge Partners in the last six years is NEMI Teas – a social enterprise set up to help create jobs for refugees. Pranav Chopra, the founder of NEMI Teas had this to say about their work with corporates through the Buy Social Corporate Challenge: “We are currently working with seven partners on the Challenge and are in consultation with two more. Hopefully we’ll be in a third of their partners’ supply chains shortly! It’s because of the Challenge that I’ve been able to directly reach out to other corporates. The Buy Social Corporate Challenge has been remarkable for businesses which have a social enterprise model and the capacity to deliver.” The report argues that not only does buying from social enterprises make a positive social impact, but that it doesn’t have to cost more: 90% of corporate partners in the challenge reported that social enterprises were cost neutral or even cheaper when compared with other suppliers, while 95% said that social enterprises delivered comparable or higher quality. Peter Holbrook, Chief Executive of Social Enterprise UK, said: “Following higher scrutiny by investors, stakeholders, staff and consumers, mainstream UK businesses are increasingly considering their social and environmental impact when they set strategy and make decisions. “SEUK welcomes this shift and we believe social enterprise has an important role to play in supporting the wider business community to embrace social value and consider the social and environmental impact of their work. “There is a group of businesses that are leading the way in leveraging their procurement in service of their purpose. The Buy Social Corporate Challenge (BSCC) partners are demonstrating effectively how their purchasing decisions can help them play their part in achieving a fairer and more sustainable economy. “What this sixth annual BSCC report reveals is that the Challenge is on track to deliver its ambitious £1 billion target, thanks to the commitment and vision of our corporate partners and the ability of social enterprises to deliver high-quality products and services.” The corporate partners on the programme are Amey, AstraZeneca, Barclays, CBRE, Co-op, Compass/Foodbuy, Deloitte, EQUANS, GSK, John Sisk & Son Ltd, Johnson & Johnson, KPMG, Landmarc Support Services, Lendlease, Linklaters, LV=, Mitie, Motorola Solutions, Nationwide, Nestle, NFU Mutual, PwC, Robertson Group, SAP, Siemens, Sodexo, The Crown Estate, Wates Group, Willmott Dixon and Zurich. You can read the full Year 6 Impact Report here

23 September 2022 Responding to Labour’s new National Procurement Plan, Peter Holbrook, Chief Executive of Social Enterprise UK, said: Social Enterprise UK has long been calling for social value to be beefed up in government contracts. Labour’s plan to prioritise the benefits for local communities and the environment in procurement is a big step in the right direction. It will send a powerful signal to businesses that everyone receiving public money has a responsibility to make our country fairer and our planet greener. The UK spends over £300bn through public procurement every year. The latest research by our Social Value 2032 programme, which brings social enterprises and businesses together, has estimated that we are missing out on over £50bn of added social value through smarter procurement every year. It is good to see Labour looking to close that gap and get value for money for taxpayers.

23 Septemeber 2022 Chief Executive of Social Enterprise UK, Peter Holbrook, said: The Government’s Plan for Growth sees the UK’s economic future being gambled on tax cuts in the hope that this creates growth. Evidence shows this will not work. With the risk of another painful recession increasing, we must look at building a different model. There are alternatives out there, and social enterprise is at the centre. We will continue to make the case for change because the country cannot prosper without it.

22 September 2022 Yesterday’s Energy Bill Relief Scheme is a vital intervention which will give our members some of the help they need over the winter months. The UK Government have published guidance on their website going into more detail about how the scheme works, information on how bills will be reduced and examples of how the scheme will be applied to different organisations.   Social enterprises do not need to take any action to access the scheme and support (in the form of a p/kWh discount) will automatically be applied to bills. The level of price reduction for each business will vary depending on their contract type and circumstances. You can read the full guidance from Government here  We will be following up with more information about what the scheme means for social enterprises shortly and will continue to work hard to urge Government to support social enterprises through the uncertainties the next few months bring.  

21 Septemeber 2022 Commenting on the energy bill relief scheme announced today, Peter Holbrook, Chief Executive of Social Enterprise UK said: This vital intervention from Government will give social enterprises some of the help that they need this winter. The cap will help our sector to protect jobs and investment in local communities, ensuring that they can continue to deliver their social and environmental missions. We now need the energy companies to deliver this discount quickly. Any delay could harm the cashflow of social enterprises and create needless distress. “However, this crisis is not going to go away. Businesses need more certainty to plan and to secure investment for growth, which is why it’s crucial that the Government swiftly clarifies what will happen beyond March next year. Until the energy crisis is resolved, the cap must be kept.

By Tom Cracknell - Co-Founder Origin Africa Problem 1: Historically, in manufacturing, the value-added activity has been prioritised to the Global North. Hence the wealth gap increases. This leaves individuals and communities in places like Kikambala, Kenya, with very little control over their own economic path. Problem 2: The textile industry has a responsibility to clean up its act. Enormous swathes of polyester and energy consuming materials are produced to satisfy an increasingly fickle market of consumption in the global north. All this production takes energy, resources and often denatures water and fertile land (let's not forget recycling clothing takes energy too). Fashion Revolution Kenya worked with the British Council in 2020 to investigate what materials really are the most efficacious and least environmentally damaging to produce apparel. They looked to establish the pros and cons of each fibre and where improvements still needed to be made. The fibres were nettle, flax, pineapple, banana, hemp, water hyacinth, sisal, cotton, silk and fish leather and wool. A lot of these do not produce suitable fabric for garments but it's worth having a look at this paper because the options are exciting! The latest evidence points to the use of cotton but not in its traditional sense of landscape changing vast production that harms environments and livelihoods. However, the Report does highlight, along with other cutting edge non biased research such as the Transformers Foundation's Cotton Myths Debunked, that a sustainable solution is to overcome the issue of water consumption (an oft-quoted criticism of cotton) by ensuring production is catalysed by rain water rather than mass hectares of irrigated land: 'A shift to mainly or solely using rain-fed cotton is a tangible solution when looking to create a more sustainable industry.' When looking to establish our own supply chain from the get-go, it took time. We had to make sure we were making the right choices. This included country of origin, textile of the garment, materials consumed, methods employed, dyes used, pesticide consumption, quality of garments, nature of factory and finally, conditions in which the garment workers worked. Let's come back to that in a moment. So, having done our research, we settled on rain-fed cotton, using an absolute minimum of pesticides along with natural water-based dyes that would not denature water, and we would go to establish the ethics of production ourselves as cottage industries in Kenya have yet been unable to establish the expensive 'Organic' certification, albeit in planning. Environmentally satisfied we were doing everything possible to tackle problem 2, back to Problem 1! We needed to find a way to ensure clothing was being produced in a way that was respectful and even beneficial to those working in the supply chain. This needed to include ensuring basic employment rights such as maternity leave, secure contracts and protection from unlawful loss of employment. It also meant looking at working conditions to make sure that harmful materials were not being used, that working hours were not exploitative and that the factory was at a temperature which was not detrimental to health. Finally we also needed to ensure that workers had the opportunity to progress and develop. According to a 2019 Oxfam Australia report, 9 out of 10 garment workers felt that their income is not sufficient or partially sufficient to meet their needs and, as a result, 87% of workers take loans from the local shop to fill their income expenditure gap. Fashion companies are forcing this to happen and consumers, all too often, don’t pay attention to the detail enough to see the harm caused in the production of their new garments. In the fiscal year 2021-22, Next Plc (the UK’s largest fast fashion brand) reported a profit of £823 million, up 140% from the previous year. With some years of experience under our belt, we have come to a certain conclusion in fashion: If an organisation is not talking about the good things they are doing, they aren’t doing them. Basically, as consumers, we should be asking the hard questions. So, in researching our new supply chain, when we approached factories and organisations who could not explain to us their employment methods, their conditions of working or whether their employees were paid above the living wage, it was obvious to us that the organisation does not align with the ethics of Origin. We simply did not work with them. However, after lengthy research and really at a point when we felt ethical production in Africa may well not be possible for Origin clothing, opportunities began to spring up that offered hope. We began to see this may be possible and may actually happen. Working with garment factory SOKO Kenya in Kikambala and farm-to-fabric business Tosheka Textiles in Wote (both female-led businesses that emphasise female opportunity every day) one can see the unquestionable opportunity generated by good employment. Women are paid above the living wage, given appropriate training for personal and entrepreneurial development and are respected to pursue their own path for establishing themselves and ensuring a bright future for their families. With such an empowering culture for women, we decided we had to work with them. When profits are generated from this clothing, we share the profits equally with each step of the production process. This means that garment workers and their communities directly benefit from a greater proportion of value-added activity in the production process of the garments they actually made, thus fighting the enormous inequalities that have historically come from large companies keeping the poor down by extracting low-cost goods and adding all that value in the Global North. It is proven that for every woman that is lifted above thefinancial poverty line, she brings 7 people with her. Now, why? Well, as Sven Beckert explains in 'The Empire of Cotton', it is curious that after millennia of equal development in the Global South and North, what academics refer to as the 'great divergence' occurred at a time when cotton's properties were being fully discovered and utilised to propel clothing into a massive world changing engine. The previously Southern industry of cotton was usurped by an increasingly Europe-centric business class and the seeds were ironically sown for this 'great divergence' to create a rich Global North at the cost of the Global South. Our supply chain methods directly combat this damaging skew. We believe fashion has a responsibility to reverse the deleterious effects it has had on the Global South. The opportunities generated within our ethical and responsible supply chain are the weapon we can use to pursue that change and, as long as brands stick to the principles that make a social enterprise (or truly ethical brand), we can fight that battle together for as long as Origin keeps trading originafrica.co.uk

Greater Manchester based pop-up TV studio and newsroom Media Cubs has worked with their biggest number of children yet - more than 750 new young people in the six-week summer holidays - transforming them into 'mini reporters' to increase confidence, skills and aspirations.  A total of 154 children were asked about their experience of the Media Cubs workshops: 93% said they had learned something new, 88% felt more confident after taking part, 84% said they felt their views and opinions are important, 78% said they were happy to speak in front of others and 59% said they think they could work in a TV studio or newsroom.  Kirsty Day, co-founder of Media Cubs and project lead, said: “First and foremost, we want all the children we work with during the holidays to have lots of fun, which is why they took on new challenges this year from stop motion to creating their own adverts and interviewing sports stars and authors.   “And as a result of a diverse set of activities we were able to support them to grow in confidence, which has taken a big knock during the pandemic, and increase their skill set and understand that their views and opinions matter – which is reflected in the survey results.  “It is also important to us to work with young people to increase their aspirations and giving them an understanding that they can grow up to be anything they want to be by having a taste of what a newsroom and TV studio entails, where previously it may have felt out of their reach. We believe that children from all backgrounds have a place in the newsroom and should feel confident that their views matter and voices will be heard.  "Feedback from young people included “I got my lack of confidence up”, “I was able to share my feelings” and “I never thought I would get to interview a sports star” - and that is what makes Media Cubs so valuable. “750 children is the highest number we have worked with in the space of six weeks and we want to continue to grow these numbers across Greater Manchester to help more young people broadcast confidence. And we have some exciting new projects coming up in Autumn to strengthen that aim.”  As well as the data from the survey, the children were also asked what they enjoyed most about working with Media Cubs and some of the highlights included trying out new things and sharing their ideas, working with the cameras, making films, creating stop motion animations, presenting and interviewing sports stars and authors. Media Cubs worked across five boroughs - Salford, Wigan, Bolton, Trafford, Stockport - and expanded the providers that they teamed up with too, including Wigan Warriors Community Foundation, Wigan Athletic Community Trust, Sale Sharks, Foundation 92, Stockport Life Leisure, Salford Life Centre, Lancashire Cricket Club, Manchester City Council, Wigan Council, and many more. If you would like to learn more about Media Cubs please visit their website: https://www.mediacubs.co.uk/