Social enterprise in the council contracts ‘market’

Amongst the deluge of (often anguished) reaction to last week’s Comprehensive Spending Review have been some interesting points from leading figures in the social enterprise world. For example, in June, Social Enterprise Coalition chief executive, Peter Holbrook, was sure that our time had come. Four months on, this view has now been significantly revised to something along the lines of ‘our time would’ve come, if only the people who might pay us to do stuff had the foggiest idea about who we are and what we do’.

Holbrook’s concern is that, charged with shaving millions from the cost of delivering public services, councils will act quickly to dish out contracts to established private sector providers rather than exploring social enterprise options that will ultimately offer a better overall impact.

Referring to local government commissioners, Holbrook told Social Enterprise magazine that: “Many don’t know about the social enterprise movement and could miss opportunities to commission better services or enable public sector staff to create social enterprises, and there is evidence that this is already happening,” and added that “Social enterprise must not lose out to the private sector simply because commissioners already know that private sector providers exist locally. The danger will be that social enterprises will not be considered or invited to tender, even though they are experienced and good at making savings while protecting the quality of services.

Ok, fair enough. But then he calls on the government to step in: “Before local authorities make further cuts to services to satisfy the 7.1 per cent annual chop in their budgets, central government must take steps to remove the barriers that prevent social enterprise delivering services, otherwise they risk being pushed out of the market, which would be a disaster at this point.

While I’m not known for my sympathy towards the lobby, I don’t think this is a wholly mistaken intervention. Holbrook is absolutely right to suggest that conventional approaches to austerity outsourcing don’t favour social enterprises (most of whom are fairly small). The question is what, if anything, government can or should do about the situation he describes.

My instinctive reaction, as someone who runs a social enterprise, is that if my social enterprise is capable of delivering a service but the people who might commission me to deliver that service have never heard of me, that’s primarily my fault. Maybe my company has been so busy fulfilling existing contracts or funding agreements that we haven’t had time to spread the word about who we are and what we do but, if that’s the case, that’s hardly an argument in favour of our ability to be able to take on additional business if it becomes available.

There are lots of barriers that make it hard to move from being a tiny company to a fairly small one and from a fairly small company to a medium-sized one – including being able to allot enough staff time to putting in tenders for the contracts you have been lucky enough to find out about – but is it possible (or right) for the government to intervene to make that process easier for social enterprises that it is for other hard-working business people.

What are the barriers that fundamentally affect social enterprises while not affecting other businesses of a similar size? And, if social enterprises are businesses competing in a market – albeit, I highly politicised one – on what basis can we demand that the market is distorted/modified (delete according to preference) in our favour? I have ideas but no fixed position on either of these questions. Interested to hear what others think.


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3 responses to “Social enterprise in the council contracts ‘market’

  1. David, This is where I can relate some practical experience having been a supplier to several councils and public sector organisations.

    We gained all of these before becoming a social enterprise through the software product we offer rather than our business model and so by and large these customers have no idea that we’re a social enterprise and given our relatively low level of connection to management they still don’t know, even when we tell them.

    When I read of a fraud investigation into the IT department of our local council, I made contact to offer our services. I was redirected from one manager to another until reaching a dead end. I contacted them again in 2008, offering support for social enterprise. They hadn’t got any plans formalised is what they told me.

    Later I was to discover that there was some activity in their relationship with a group setting up a healthcare SET which has since come under investigation by auditors having absorbed significant funding without trading. I had been spent on “consultancy” where no experience of social enterprise was evident.

    A local representative of the FSB informs me that small business isn’t welcome on the local action group where larger organisation sit comfortably with the council on local development issues. That’s something we can expect more of when LEPs are activated.

    I had one customer in Devon who’d promised verbally to process our support invoice and then retired. His replacement simply refused to pay, as far as I know they are still using the software. I contacted a social enterprise support agency in the same city who might support me in getting paid. I contacted them 3 times between 2006 and 2009 describing our approach. They finally answered in 2009 to say they were too busy to be involved because of work on the SE Mark. When this was published the following year it bore an uncanny resemblance to the business model I’d described in my communications.

    Compared to what we’ve experienced at the hands of central government however, these encounters pale into insignificance.




  2. David

    This almost reads is if you feel that the SEC and SE Mark are all about protectionism. Indeed in my darker moments I’ve seen the SE Mark as exactly that.

    As we all know, protectionism doesn’t work. Why else when West Germany developed the VW Golf was East Germany content with the Trabant? For any social enterprise to succeed it has to strive to be like a Golf – however much smoke a Trabant makes, it still is not going to wow those with choice about how or where to invest their money.


  3. beanbagsandbullsh1t


    Well, yes and no. I certainly hope the SEC and the SE Mark aren’t going in for protectionism – the only UK market where self-defined social enterprises currently have a dominant market position to protect is the market for social enterprise lobbying, and that’s fairly protected already.

    In this case, I think SEC are – honourably and sensibly, certainly in terms of their intentions – arguing that if the government really wants social enterprises to deliver The Big Society, then it needs to take action to make it easier for them to compete in the markets for service delivery.

    My concern is I’m not sure what practical steps the government can take – beyond saying ‘you must give contracts to social enterprises’, which I’m not sure either legal or right – to ensure that contracts are given to organisations that are structurally defined as social enterprises.

    But beyond that I’m also not sure who would benefit from that decision being taken. I can see strong arguments for social impact clauses in council contracts but I don’t see who benefits from (and I suppose this would be protectionism – assuming it was ever put in place) a situation where non-social enterprises wouldn’t be allowed to bid to deliver that social impact.


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