‘Largest social enterprise sector in the world’ some way off

It’s now over a year since health secretary, Andrew Lansley, used the launch of his first white paper to announce plans to turn the NHS into ‘the largest social enterprise sector in the world’. A report published this month by respected health think tank, The Kings Fund, explains that there’s still some way to go to achieve this goal and suggests that the current climate may actually be less conducive to the establishment of sustainable social enterprises in the UK health sector than the set-up under the previous government.

The basic situation is that the impact of New Labour’s Right to Request programme was fairly limited. Not limited in terms of the good work done by the new social enterprises that have been created as a result of the programme but limited in the sense that a very small number (only 20 so far with a few more to follow later this year) of organisations have been created.

While the Right to Request guaranteed that those who managed to jump through necessary hoops to set something up usually got a decent package of support and a long-term contract with the organisation they were leaving behind, the new government’s Right to Provide offers no such guarantee. So, while many NHS staff previously baulked at the idea of leaving the NHS to form a social enterprise in a situation where that social enterprise had a guaranteed 3-year-plus contract and was willing and able to match their existing pay and conditions, the offer is now that they can form a social enterprise and bid for a contract against Foundation Trusts and private sector providers.

The spoonful of sugar has been removed and the new government has an alternative, more robust, strategy for making the medicine go down. Unfortunately, despite Mr Lansley’s statement, social enterprise is no longer necessarily the medicine of choice. The government has imposed a purchaser/provider split that means PCTs (mostly on their way out) can no longer commission services from themselves. In some cases this has seen PCT provider arms are becoming social enterprises, in other cases their functions are being absorbed by local Foundation Trusts and private sector providers are also able to bid for contracts. So while many NHS staff will have no choice but to embrace change, it’s not likely the majority will end up forming or working for social enterprises.

In terms of what’s happened so far Social enterprise in health care reflects a largely fruitless search for evidence of the effects on social enterprise in healthcare. What is offered on ‘Impact of Social Enterprise’ is mostly about whether social enterprises are the best vehicles for delivering greater internal engagement between staff and management.

There’s two problems with this. One is that the report embraces the apparently contradictory position that particular structural forms are not a big issue:  “We do not differentiate between the structural forms that the various organisations may take. Instead, we categorise them as social enterprises because of their overarching intention of operating independently from the NHS, and reinvesting profits for the benefit of patients.”

while offering very little evidence for the benefits of any social enterprise structures not based on employee ownership (which is most of them). The other is that the evidence about the benefits of employee ownership doesn’t have anything specific to do with health and social care – and certainly don’t explain how employee ownership will make health services better beyond general suggestions about making organisations less bureaucratic and more innovative.

This confusion is more a reflection of a general state in the sector than a reflection on the Kings Fund. While there’s a broad consensus that more social enterprise in healthcare is a good thing, people’s motivations for signing up that consensus are incredibly diverse and, in some cases, barely explained at all. So there’s the problem that there’s not yet much evidence so far of what social enterprise can do for health and social care, combined with the problem that there’s no broad agreement on what it’s important to have evidence of.

Overall, Social enterprise in health care‘s sombre assessment of what might happen in the current climate still seems optimistic based on the practical realities. Some of the report’s final recommendations focus on social enterprise directors engaging with staff and being supported to develop business skills. This is important but these things won’t, in themselves, enable new social enterprises to compete successfully for contracts with Foundation Trusts and large private providers.

The key recommendation that would do that  is: “The guarantees and provisions of the earlier Right to Request programme should be continued. Arguably, the programme has been successful because of its commitment to guarantee pensions for existing NHS staff, as well as the investment in awareness-raising and development support, the contract guarantee, and backing from the centre for individual applicants when faced with local, regional and trade union opposition.”

This seems unlikely to happen but, if the government genuinely wants social enterprises to take on a significant portion of NHS delivery, then either some initial contract guarantees or preferential commissioning is vital.

Amidst the confusion and bluster, a couple of things are clear:

(a) there are some highly committed, entrepreneurial people in the UK who are successfully using social enterprise as a vehicle to deliver health services that are more flexible and responsive to need than existing NHS service without focusing on shareholder profit and – despite the growing practical challenges – some others will follow their lead in the near future.

(b) if the government really is committed to creating opportunities for socially enterprising approaches to delivering healthcare, it will have to provide practical support to existing social enterprises, new social enterprises and spin outs to tip the scales in their favour.

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