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Social Enterprise and the Spring Budget 2024
Now that the UK has slipped into an official recession, and with living standards stagnating, this week’s Spring Budget will likely look to stimulate private sector activity. This is an opportunity to re-imagine how policy can support business, and to encourage the growth of more responsible and diverse models of business whose aspirations are aligned to the wider economy.
The distinct challenges faced, the pressures these exert and the response of the business to succeed can vary enormously across the business landscape. This is especially true for social enterprise models, which already run against the grain of what is expected of a business by prioritising social and environmental missions alongside the need to make profit.
However, much national policy remains uniform, and therefore unable to meet the needs of different business models. Efforts to support business growth in recent years have focused on a mixture of tax cuts, capital subsidies and rapidly designed support packages to address external shocks like Covid-19 and the cost of living crisis.
Despite their growing prominence, social enterprises are often overlooked by government. For example, the flagship policy of full expensing (the scheme that allows capital investment to be deducted from tax bills) was hailed as the biggest cut to business tax in modern times, and critical for encouraging business investment. However, new Social Enterprise UK research has found that almost three-quarters of social enterprises have failed to benefit.
It has been hinted that further tax cuts will be announced during the Spring Budget – but this is an opportunity to adopt a fresh approach. At present, policy is proving ineffective at supporting the growth of more diverse business models. Various policy levers are just waiting to be pulled by government, including:
- expanding green investment funds to help support the creation and growth of environmental enterprises, while facilitating the net-zero transition among the wider business community.
- reforming the tax code to incentivise private investment into social enterprises and other community businesses.
- implementing a Community Right to Buy Act that allows local authorities and the communities they serve to develop local assets that can stimulate economic activity and generate revenue.
We cannot continue with business as usual. Social enterprises have proven resilient in the face of economic hardship, but they are failing to achieve their potential. Policy needs to be adapted to recognise that different forms of business not only exist but need specialist support. Recognition of this is the first step towards the creation of a more diverse, vibrant and impactful business community.
