The people vs. social enterprise

It’s a been difficult week for supporters of an increase in social enterprise delivery of NHS services. First commissioners in Surrey awarded a £500 million contract to a private sector provider owned by Virgin rather than a flagship spin out, then a few days later Civil Society reported that plucky campaigners in Gloucestershire had succeeded in derailing their local PCT’s plan to hive off its delivery arm into a Community Interest Company (CIC).

In Gloucestershire, local resident Michael Lloyd, supported by the campaign group Stroud Against the Cuts, is bringing a legal action against NHS Gloucestershire apparently on the basis that they have failed to follow the correct process for transferring services out of the NHS. Following the commencement of legal proceedings, NHS Gloucester have temporarily halted the transfer of services to the new CIC, Gloucestershire Care Services, while they take legal advice.

Those with an ideological antipathy towards ‘privatisation’ who are tempted to see this result as a victory should probably take a closer look at the Civil Society report – particularly the bit of it where the spokesperson for Stroud Against the Cuts and Mr Lloyd’s solicitor (who are theoretically on the same side) put forward positions which are entirely contradictory in terms of the suggested outcome if the legal challenge is ultimately successful.

Caroline Molloy of Stroud Against the Cuts states that: “We have been advised that NHS Gloucestershire is acting unlawfully. It cannot just hand over all its NHS Primary Care Trust services to an unaccountable social enterprise or community interest company. It must either keep the NHS services itself, or have a proper process that would allow services to be provided by another NHS body. Both these options would keep our health services in the NHS, and accountable to the public.

Mr Lloyd’s solicitor, Rosa Curling, while agreeing that the PCT has acted unlawfully, says nothing about allowing services to be provider by another NHS body. Instead she says: “If the PCT intends to enter into arrangements with a community interest company, it is first required in law to go through a process which allows other economic operators the opportunity of being awarded those contracts.

The Transforming Community Services programme – which demanded that PCTs separate commissioning of services from provision – is practically the only bit of New Labour health policy that the coalition government’s incoming health secretary, Andrew Lansley, decided should carry on. Not least because, having ceased to be directly responsible for service delivery, PCTs would/will* find it easier to comply with his wish that they abolish themselves entirely by 2013.

It is not impossible that the result of Stroud Against Cuts’ campaign is that NHS Gloucestershire will choose to transfer its provision to a local Foundation Trust instead of a CIC – it’s not clear from the article whether there is a local Foundation Trust that’s interested in taking the services on. What’s at least equally likely is that if the PCT has to abandon the transfer to a CIC, it will initiate the open process that Ms Curling describes and that process – as was the case in Surrey – may be won be a large private sector provider.

If was a placing a bet, I think the most likely result in this particular case is that the legal challenge won’t succeed and that the PCT will ultimately go ahead with its plans for a CIC at the cost of a short delay and thousands of pounds of NHS budget spent on legal fees.

The danger for the social enterprise movement, or at least those bits of the movement that are particularly keen on NHS spin outs, is that this case may persuade other PCTs who had been considering spinning out their provider arms – or backing proposals from staff teams actively keen to set up spin outs – to choose instead to go for an open tendering process on the basis that this will not be subject to legal challenge.

Even many of us who are agnostic about the likely benefits of spin outs in a general sense would ultimately be far keener on a situation where PCTs give the social enterprise option a try rather than initiate open tendering processes in which private sector providers have a significant in built head start. Whatever ultimately happens to NHS Gloucestershire’s services, there’s a great danger that campaigners there may have inadvertently handed a significant boost to private companies hoping to break into NHS provision.

*MPs/Peers to delete as appropriate


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5 responses to “The people vs. social enterprise

  1. Given my position of running a social enterprise in Gloucestershire and as a patient, dependent on their supplying me with a chemo drug, which would otherwise be unaffordable, I welcome this scrutiny.

    My view is that we must look beyond the ‘social enterprise for everything’ mentality to consider the full implications of handing over primary care to an external agency, irrespective of the label it bears.

    As I know from conversation with John Mulkerrin of the CIC Association, there aren’t many for whom the path is made so easy.. A £100m income handed on a plate as sole supplier from day one.

    This isn’t the experience that either John or I refer to when we say ‘no more scraps’ referring to the paucity of government support. I’ve attempted for example to tender to NHS Gloucestershire as a social enterprise IT service supplier. i know from an insider why they rejected us and it would help me greatly for them to state this reason, but they simply refuse to respond.

    Given this kind of difficulty, it doesn’t go down well to hear that a £12.7 bn IT project is about to be abandoned. A closed shop to us from the beginning, even as a wannabe supplier of hospital records software.

    Given the earlier experience of a healthcare CIC which ‘borrowed’ from the district council, the people have good reason to be wary of social enterprise. The consultant on whom a great deal of public funding was spent, turned out to be a former director of Atos Healthcare.

    We will benefit in the long term, both the public and the social enterprise movement, if the process is seen to be open, ethical and inclusive and contributing to the development of a broad social economy through its supply chain. There is so far, no indication that it will be so rigorous.


  2. I am convinced that the current government sees social enterprise as a kind of trojan horse for privatisation of the NHS. I cannot at the time of writing recall any other area in which the government really supports this type of business.

    Through the NHS they have highjacked the term social enterprise and social enterprise is in danger of being tarred with the trojan horse/NHS privatisation reputation forever.

    I doubt very much whether social enterprises or CIC’S are at the stage where they can compete with private businesses such as Virgin and one or two may win contracts in the early stages but as soon as the floodgates open they will be muscled aside by the big boys.

    That’s been my view from the beginning and it hasn’t changed.


  3. Beanbags admin


    I don’t agree that the government see social enterprises as a trojan horse for privatisation because the coalition’s support for greater private sector involvement isn’t a secret – it’s their openly stated policy.

    Whether a more open market in delivering NHS-commissioned services will make those services better and/or cheaper is a different question but Mr Lansley is being honest and upfront about the fact that he supports that agenda,

    I do agree, though, that it seems unlikely social enterprises will be able to compete with corporates under the current conditions. The question is whether this is a problem that anyone apart from the social enterprise lobby really cares about.

    Are large numbers NHS staff and/or the general public saying ‘we really want health services to be delivered by social enterprises’? If social enterprise is not significantly more palatable than private sector delivery than there’s less chance that ministers will stick their necks out to back social enterprise.


  4. Is the issue actually about who owns and controls the organisation. Although CIC stands for community interest company it does not mean that the community have any input or say in that CIC. If the CIC was to offer a community share approach would they have met such resistance. It Is it not time that social enterprise began to challenge preconceptions of social enterprise by actually behaving like one.


  5. If you had placed that bet, you’d have lost it. The campaign reached an out of court settlement with NHS Gloucestershire, in many ways a better outcome than an outright legal victory. See or


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