News
Why we’re asking the government to talk to social enterprises
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The government has announced that a Social Impact Investment Advisory Group will ‘review existing work on impact capital … and provide views on the long-term future and direction of this work.’
As this comes hot on the heels of Lord Adebowale’s recent report into social investment, this should be welcome news. There’s only one problem: they’re not talking to social enterprises – the customers for social investment – about it.
To try and address this oversight, we’re publishing an open letter to the government pointing out some of the flaws in social investment uncovered by the Adebowale Commission and offering to work with them, connecting them with social enterprises to talk to as part of their work.
Our open letter
Dear Chief Secretary and Secretary of State,
As representatives of social enterprises across the UK, we were interested to see the promise of a new Social Impact Investment Vehicle announced in the Autumn Budget, which we hope can support the Labour government to deliver on its key missions.
As you will be aware, social enterprises work in every sector of the UK economy. Government figures report 131,000 social enterprises, with a collective turnover of £78 billion and employing around 2.3 million people. These businesses are growing local economies, delivering high quality public services, running creative arts and leisure services, hospitality and restaurants, cleaning, recycling, clean energy and waste management businesses.
We know that investment can be a powerful tool which enables mission-led businesses to thrive – evidence tells us that social enterprises which receive investment experience higher growth and make an even greater contribution to our economy and society.
Yet too often over the last decade, the promise of social impact investment has failed to reach its full potential. This is especially true for marginalised social entrepreneurs. In 2023, while 40% of social enterprises did not think the finance available to them was suitable, this number rose to 51% among Black-led social enterprises. Similarly, while 60% of social enterprises reported that financial barriers were impeding their growth, 71% of Black-led social enterprises felt this applied to them.
We were particularly pleased to see, therefore, that the new Social Impact Investment Advisory Group will review existing work in the field and provide views on the long-term future and direction in this area. We hope the Advisory Group can play a deliberate role in reducing these inequalities and ensure social entrepreneurs from all backgrounds have access to flexible, sustainable finance.
To ensure that this new impetus does not replicate the existing inequalities found within social impact investment, it is critical, therefore, that membership of the Advisory Group is balanced by those with less power in the market. We urge you to engage not only with existing investment providers and financiers, but also with those on the demand side – with social entrepreneurs, with those who struggle most to attract finance, and with those who have yet to see the benefits of shared ambitions.
We would like to support you with the development of a new, shared direction for the future of social impact investment – one which engages with social enterprises up and down the country and from all backgrounds, and which can unlock the potential of those who are often left behind by existing initiatives.
We would be happy to recommend social entrepreneurs and social enterprises to engage with as part of the Advisory Group, and throughout their work, to ensure this new impetus addresses imbalances in the social impact investment field and delivers inclusive economic and social value in support of the government’s missions.
We want to see mission-led businesses work hand in hand with your mission-led government to deliver sustainable social and economic impact across the UK. We look forward to supporting your work further and welcome the opportunity to meet with you at your earliest convenience.
Yours sincerely,
Bethan Webber, Colin Jess, Chris Martin, and Peter Holbrook
CEOs of Cwmpas, Social Enterprise Northern Ireland, Social Enterprise Scotland, and Social Enterprise UK