Thought Leadership

Like most households and businesses, social enterprises are concerned about rising costs and inflation. Their level of concern has increased significantly over the last quarter, with over two-thirds of social enterprises worried about the impact on their businesses. Yet when thinking about solutions, social enterprises are focused on longer-term impact and structural reform – they are not reacting to this pressure by requesting subsidy or seeking to cut costs. When asked what support they needed, less than half of respondents said that fiscal or grant-based support was what they required. As the lack of government measures to address inflation and rising costs impacts the whole economy, we are collecting data through the Social Enterprise Advisory Panel to understand how social enterprises are being affected. In our January Social Enterprise Advisory Panel[1], we saw that 34% of social enterprises expected cost of living to be a significant concern over the following 3-6 months. This was alongside ongoing COVID uncertainty and reduced income/revenue associated with both the pandemic and inflation. In March that figure had risen to 68%. Over a fifth are very concerned, and just 7% think that there will be no negative impact on their business. Don’t anticipate a negative impact on business7%No impact yet/not sure what the impact will be23%Somewhat concerned46%Very concerned – already seeing significant impact22% Level of concern about the impact of the rising cost of living In addition to concern about rising costs, we asked whether operating costs have changed in the last quarter compared to the previous quarter. 55% of social enterprises have seen operating costs increase, with 10% of these saying costs have increased significantly. Don’t know or prefer not to say4%Operating costs have significantly increased10%Significantly decreased3%Slightly decreased8%Slightly increased45%Stayed the same30% Operating costs changes in the last 3 months, compared to the 3 months before When asked about support required to mitigate the impacts of rising costs, we presented the options of tax relief and emergency grants. Just under a half of respondents indicated that these would be useful to them – meaning that over half didn’t see these as key solutions. What was more interesting from results was that social enterprises are thinking about longer-term solutions and wider, more structural reform. Alongside suggestions for temporary government support to address escalating property and energy prices and to reverse the proposed national insurance contribution increase, social enterprises are proposing solutions that are less focused on the immediate needs of individual businesses and address structural reforms needed to deliver strong and growing social enterprise activity over the medium and longer-term. For example, whereas social enterprises said that energy price caps would help them mitigate price rises, there is equal interest to address overall energy efficiency in the medium and longer-term as part of the solution to current high energy costs. “Help to reduce overheads by providing capital expenditure for more energy efficient heating & lighting“ Similarly, social enterprises want measures to address consumer discretionary spend – rather than providing support directly to social enterprises. Because many social enterprises work in and for communities in areas of high deprivation that were already stretched by the financial and wider consequences of the pandemic, cuts in discretionary spending are likely to have a more immediate impact than for many other businesses. But unlike direct financial support to businesses, fiscal support to impoverished people offers the double benefit of relieving those most in need – and, indirectly, ensuring that social enterprises which offer them support can continue to do so. “Government intervention to ensure that discretionary spend is still available for people to buy services like ours.” “Supporting community against the rising cost of living especially food and fuel costs.” Rising costs are not being mirrored by changes to contract fees and the need to address this procurement issue is becoming more acute for many social enterprises. “All our work is with statutory bodies, umbrella bodies and housing associations, these are contracts where fees have remained static for more than 10 years.” Also on a wider level, albeit not directly related to the rising costs, there is growing concern about a gap between the UK Shared Prosperity Fund and past EU funding and the implications this will have on poorer communities in particular, and therefore on social enterprise activity in these areas. What is the ask from social enterprise? Energy price caps in the short term and more support towards energy efficiency in the medium term. Procurement pricing changes to account for significant supplier and input cost increases. More support to mitigate costs for the poorest individuals and households in the short term and wider and deeper fiscal reform in the medium term.

If you were asked to picture our health system you’d probably think of hospitals, GP practices, ambulances and care homes. What you probably wouldn’t think about are gyms, childcare, woodland adventures and supermarkets. In Salford, Greater Manchester, one social enterprise is radically changing how a community can address health inequalities through redefining what is possible when it comes to the delivery of care. It is doing this through genuinely placing communities at the heart of their work, thinking outside the box, setting up businesses to create a sustainable source of income and genuine employee ownership. Getting closer to the issues Social adVentures was set up in 2011, part of a wave of organisations which ‘spun-out’ of the public sector following the Government’s Right to Request programme which encouraged the creation of public sector mutuals. Founder Scott Darraugh and the rest of the team believed that moving out of formal NHS structure would allow them to be more innovative and closer to the issues faced by the people they are set up to support. Since taking these first steps they’ve not looked back. Social adVentures is a social enterprise embedded in the local community being co-owned by staff and local people. This has allowed for the co-design and co-production of services, allowing service users to have a voice in decision making and giving staff more autonomy to make decisions and come up with their own solutions. Its core mission is to enable people to live healthy lives and it started off as part of NHS Salford in the public health unit running community programmes including learning disabilities and mental health services. Since setting up as an independent social enterprise they’ve expanded on this to win a series of contracts including a partnership delivering social prescribing services in Salford. This involves working closely with partners in the public sector and the VCSE community to sign-post individuals to the most relevant services with an emphasis on preventative care. Funding services through setting up social enterprises “anybody that comes through that front door of this place is made welcome, dealt with in a sympathetic manner, made to feel human again” – Garden Needs participant Alongside public health and social care contracts Social adVentures runs a series of social enterprises, the surpluses from which not only fund services but which are themselves a vital part of increasing community health and wellbeing. These include day nurseries, a community garden, a community gym, forest school training and a social supermarket based at the organisation’s HQ, the Angel Centre – a complex which runs a series of programmes, classes and events from work placements, counselling and coaching to services around quitting smoking and drinking. Every individual business is dedicated to making a difference to help enable people to live healthy lives. An example is Garden Needs, a mental health contract delivered by Social adVentures from their community garden which provides around 2028 hours of support to adults with mental health conditions every year – bringing people together, building confidence and helping people manage their own mental health. The delivery of early years care fits into the social enterprises’ ethos of looking at the causes of ill health and coming up with solutions to deal with them. Joining the dots between the prohibitive costs of childcare, unemployment and mental health – the nurseries offer free childcare for those who need it and also provide opportunities for work though Social adVentures apprenticeship programme. Currently the social enterprise runs four childcare settings under the brand Kids adVentures. They also run forest schools, allowing children to build a connection with nature and improve their physical and mental wellbeing. Transforming a café into a supermarket “It has been fantastic to be given the opportunity to grow the Food Collective from scratch and to implement my own ideas. There’s no barrier to making changes that you think will work in your area of the business and that means you feel trusted and valued - Dale Finney Retail Assistant at the Food Collective A major part of their work tackling health inequalities revolves around the addressing food poverty and during the pandemic the Social adVentures team created a food club with the support of food poverty charity, Fareshare, working with their school to provide food parcels to vulnerable people in their community and those who were shielding. Prior to the pandemic, one of Social adVentures most popular ventures was a community café run out of the Angel Centre but this had to close when the country went into lockdown. Staff decided that this space could be transformed into a social supermarket to act as a permanent hub to provide affordable, fresh food for the local community and to support the food club. Social adVentures shows how a social enterprises embedded in its community can work across sectors to link up care and join up the dots when it comes to recognising and dealing with cause of ill health. What’s more they are showing how the freedom that comes with being an independent social enterprise can allow both staff and members of the community to come up with genuinely innovative ideas, such as turning a café into a supermarket. Through setting up social enterprises under the Social adVentures umbrella such as the nurseries, community garden and a gym, they have created a degree of financial stability rare in the public sector. Remarkably nearly half of all the money coming into the business is through trading income. socialadventures.org.uk

May 18 2022 A new report by Social Value 2032 and authored by Professor Chris White – former Member of Parliament and author of the Social Value Act – has found that smarter public sector procurement could unleash an extra £56bn per year in social value which could be used to level up the country, tackle Net Zero and strengthen communities. Social Value 2032 is a new partnership and programme of work delivered by PwC, Shaw Trust, Siemens, Suez recycling and recovery UK and overseen by Social Enterprise UK (SEUK). Ten years after the passage of the Social Value Act, which places an obligation on public bodies to consider the wider economic, social and environmental impact of the services they commission and procure, this partnership has launched a new report: Social Value 2032: Creating a Social Value Economy. The report outlines a new vision for social value, a way of using procurement to create added social, economic and environmental impact through spending by public bodies and private companies. Social Enterprise UK has analysed the past decade of public spending and found that the UK public sector is only realising a fraction of the benefits that could be generated through greater embedding of social value. The analysis found that between 2010 and 2020 an estimated £36bn could have been generated through social value in public sector procurement. An estimated £762bn could have been generated if social value had been implemented universally across the public sector from day one of the Social Value Act.   Using this figure SEUK estimates that there is £56bn of social value that could be unlocked by the public sector annually – equivalent to double the UK Government’s current commitment to Net Zero. As the Government looks to level up the country, this new report identifies a major ‘quick win’ to use existing public sector spending to reduce inequalities and transition to a green economy. Alongside this, the report calls on the UK’s largest businesses to adopt a social value approach to working with the public sector. The report, published at the Social Value Leaders’ Summit in Birmingham on 18 May, outlines a new vision for procurement focused on: Systems-change: using procurement to create better and more sustainable businesses and markets in the UK.Transformative public services: focused on long-term prevention and innovation.Environmental sustainability: considering not just the social impact of how we spend money but also the environmental impact. Realising this vision for the UK will: Deliver levelling up faster through smarter use of public and private investment.Make British business stronger through promoting long term investment and sustainability.Create stronger communities through greater partnership between places, businesses and government.Help the UK take advantage of the growing market for environmentally sustainable products.Make the UK the world leader in measuring social and environmental impact generating billions in service exports. Download the full report Download the report summary

15 May 2022 Commenting on Big Society Capital’s response to the Commission on Social Investment, Peter Holbrook CBE, Chief Executive of Social Enterprise UK said: “Social enterprises will support Big Society Capital’s decision to cut its target rate of return, an issue which has been raised over many years as part of the reason that our cost of capital is expensive relative to other businesses. This is a positive step forward and a big win for the Commission on Social Investment. We hope the benefits from this change will be passed down to social enterprises in lower cost finance.” “We are disappointed, however, that Big Society Capital has chosen not to accept the Commission’s recommendation to put social enterprises at the heart of its mission. They are right to say that they only have limited funds to make a difference, but this is even more of a reason to target helping social enterprises to grow rather than spending their resources thinly.” “Ultimately, as the Commission said, we should trust social entrepreneurs. Growing social enterprise is the most effective way to tackle homelessness, climate change, health and wellbeing or any of the many issues that Britain faces.” “Social Enterprise UK also urges Big Society Capital to look again at providing investment into a black-led social investment intermediary and fund. It has taken a creative approach to financing developments in the social investment market in the past. Given the obvious discrimination against black-led social enterprises in the market, Big Society Capital must take responsibility. There is no legal restriction on Big Society Capital using grants or creating a blended funding package including grants, equity and debt. We must not allow squeamishness about grants to block efforts to advance social justice.” You can read Big Society Capitals response to the findings of the Commission on Social Investing in this piece featured in Pioneers Post.

12 May 2022 Social Enterprise UK (SEUK) has appointed five new Board members following a rigorous recruitment process. SEUK’s Chair Lord Victor Adebowale CBE commented: ‘SEUK’s new Board members will add complementary abilities and experience to an already strong Board and ensure we have the best possible mix of skills in our boardroom. ‘Social enterprise has significant potential to improve our society, but this potential is being held back by issues such as lack of access to social investment, at a time of greater demand for support from local communities. I look forward to working with the Board and the SEUK team to support, enable and champion the social enterprise sector, to unleash the potential for the fairer and more inclusive society that social enterprise can offer.’ The five new Board members will be formally appointed at the next SEUK Board meeting on 12 May 2022, and will join an experienced Board who have steered the organisation, and supported the social enterprise movement, through the pandemic. SEUK Chief Executive Peter Holbrook added: ‘We are delighted to have been able to appoint five such experienced and respected leaders, drawn from across the diverse and dynamic social enterprise community, to join the SEUK Board.   ‘I look forward to working with them to take SEUK’s ambitious strategy forward and support our members to flourish despite the profound economic and social shocks the UK is currently navigating, and the continuing climate emergency. The social enterprise sector is proving resilient so far but now more than ever we need to ensure social enterprise can power out of the pandemic period and play its part in building a fairer society in which everyone can thrive.’ The new board members are: Amy Denro – Multi award-winning social CEO and co-founder of groundbreaking social supermarket HISBE Food. Chris Luck CB, MBE – Senior leader, former Air Vice Marshall and now CEO of the Shaw Trust Group, the UK’s largest employment sector non-profit. Devi Clark – Experienced leader, strategist and coach and Managing Director of the influential Impact Hub King’s Cross (IHKX). Patricia Keiko Hamzahee – Former investment banker and co-founder and Director of the Black Funding Network and Extend Ventures. Advising and championing social enterprises’ access to funding. Sarah McIntosh - Social purpose membership organisation expert and Executive Director of Membership and Delivery at Mental Health First Aid (MHFA)

March 2022 This webinar, held by the Fair Tax Foundation team went through the benefits of gaining the Fair Tax Mark and how it can contribute to the goals of social enterprises. The Fair Tax Mark accreditation scheme seeks to encourage and recognise businesses that pay the right amount of corporate income tax at the right time and in the right place. It is the gold standard of responsible tax conduct. As with Fairtrade and the real Living Wage, businesses can take the lead by voluntarily showing commitment to best practice. https://www.youtube.com/watch?v=myrWaDL3aKM

23 March 2022 Peter Holbrook CBE, Chief Executive, Social Enterprise UK said: “There is some good news in the Spring Statement today for social enterprises, with increases in Employment Allowance which will help social enterprises to continue to successfully create meaningful jobs, and the Chancellor’s VAT-cut on energy saving materials which will help strengthen the growing green social enterprise sector.” “The Chancellor set out the need for more investment in people, ideas and capital – exactly what the UK’s social enterprises are so effective at delivering. But instead of recognising the need to reform the private sector, he is cutting tax and hoping that business will do the right thing. All the evidence shows that it is not a lack of generous tax support which is holding our economy back, it is the short-termism of business and finance.” “SEUK will engage closely with HM Government on its proposals to reform our tax system to help businesses grow and we will champion social enterprises. But tax cuts are not a substitute for a plan to reform the economy. This is the case that social enterprises will keep making in the months ahead.” 

March 2022 This webinar was hosted by Berkeley Wilde, Executive Director, The Diversity Trust CIC. Berkeley talked about how the Diversity Trust works, outlining the journey the organisation has been on over the last two years, the impact of Covid-19 and the global awakening of Black Lives Matter and the impact this has had in the UK. Listen to the recording below: https://www.youtube.com/watch?v=NMuQaNgpoQE