Tag Archives: social enterprise UK

Social investment explained

There’s no shortage of exciting rhetoric about social investment in the UK but what does the market actually offer to charities and social enterprises? What questions do you need to ask before you decide whether to look for social investment at all or to help you decide which forms of investment might be relevant to your organisation?

Over recent months, I’ve been working with Social Enterprise UK – Nick Temple in particular but also Dan Gregory and other members of the team – to write Social Investment Explained, a new guide commissioned by Big Lottery Fund, that hopefully provides an accessible introduction to social investment in the UK. It would be great to here what you think of it.

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Business as very similar

Boasting an investment of £850,000 from social investment wholesale finance institution, Big Society Capital, the Social Stock Exchange is a project that’s formed an integral part of the UK social investment bullsh!t machine for several years. While many in the social enterprise sector doubted that it would ever arrive at all, even the pessimists are likely to be disappointed by its shamelessly comical failure to deliver on either of the elements implied by its name.

At yesterday’s launch, prime minister, David Cameron, hailed the project proclaiming: “This is just the beginning… For years the London Stock Exchange has made London the home for private finance. Today London can cement its place as the home for social finance, too.

The exact role of the Social Stock Exchange in building the home of social finance is not immediately clear. What it definitely isn’t,  is an exchange where people or institutions can trade stock: “Can I trade on the Social Stock Exchange. No. The Social Stock Exchange isn’t a trading exchange. It connects social impact businesses with investors looking to generate social or environmental change as well as financial return from their investment.

On that basis, you would assume that it’s a bit stronger on the ‘social’ side of things. There’s certainly reasonable clarity about what the Social Stock Exchange team consider ‘social’ to mean. As chief executive, Pradeep Jethi, explains on Guardian Social Enterprise Network, member companies are:  “not necessarily what you may think of as the classical definition of ‘social enterprise’, but we think that everyone benefits from being a bit broader about this concept.

Instead of ‘classically defined’ social enterprise, Social Stock Exchange defines the businesses they’ll be showcasing as ‘Social Impact Businesses’ explaining that: “A Social Impact Business is one that uses commercial models to organize, mobilize and manage a for-profit business that delivers social and environmental change.

The practical function of the Social Stock Exchange is to: “connect Social Impact Businesses with investors looking to generate social or environmental change as well as financial return from their investment

The Exchange will “provide investors with the information they need to identify and compare those organisations that deliver value to society and the environment

The process of becoming a member: “includes the publication of an Impact Report and application for admission to an independent Admissions Panel.

The eligibility criteria for membership are that: “your company must:

  • have social or environmental impact as a core aim;
  • be publicly listed.

Amongst the founder members of the Exchange, the largest by market capitalisation is Primary Health Properties – a company that buys (or builds) healthcare facilities and leases them to the NHS. In 2012, they made a profit of £13.4million in doing so.

This is a perfectly legitimate private business activity but the primary social and environmental change they’re delivering is to take cash out of the social pot (the NHS) and put it into the pockets of their shareholders. Perhaps, their ‘Impact Report’, on Social Stock Exchange might provide some evidence about the additional social value they’re delivering?

Well, what they’ve come up with so far is: “At present, PHP does not operate a comprehensive social impact measurement system on a regular basis. However, in future, it is committed to setting in place a monitoring framework to help it evidence social value.

It’s unclear whether the Social Stock Exchange we’ve ended up with is the same one that has been failing to appear in the role of Godot on the UK social investment stage for all these years. In an interview with me in 2011, Social Enterprise UK (SEUK) chief executive, Peter Holbrook, explained that: “I think one of the  really exciting developments is the idea of a Social Stock Exchange. It’s been hanging around for a little while but my understanding is that it’s going to be launched this year. I think it’s fundamental in connecting individuals with a true social purpose.”

He continued: “I’ve got my pension in an ethical fund which is environmentally light green if it’s green at all – it’s probably turquoise. I would love to be able to say to my pension fund administrator: ‘Actually, I don’t want your turquoise or your light green fund – which just pulls out the very, very worst offending companies: tobacco, arms and similar activities. Actually, I want to invest in companies that are genuinely socially beneficial and therefore I want you to invest my pension in the Social Stock Exchange.”

I don’t agree with Peter Holbrook on everything but he’s both an intelligent man and someone whose definition of ‘social’ is considerably stricter than mine. I’d be surprised if he’s really spent the last two years getting excited about a vehicle for salving the consciences of the small percentage of people who were being kept awake at night by the idea that their pension was being invested in a tobacco company rather rather than being put to the more positive use of financing the privatisation of public buildings.

Even in the event that they view this outcome of positive, it’s not immediately obvious how the Social Stock Exchange might enable individual pension holders such as Holbrook to bring it about. While Pradeep Jethi claims that the Exchange: “helps to ‘democratise’ social investment, by allowing ordinary citizens to learn about potential investments in publicly listed social businesses, something that’s harder to do with classical social enterprises” there’s no explanation as to how it will do so.

Some example of existing platforms that are fulfilling that function include Ethex and, for those who think ‘classical social enterprises’ might be worth investing after all, the soon-to-be-launched Community Shares platform, Microgenius.

At best, the Social Stock Exchange is a brokerage service for listed companies that engage in some sort of activity that could in some way be described as social. If there’s a market for that amongst companies and investors, it’s a perfectly decent idea for a private business – but not one that justifies either investment from Big Society Capital or a launch by the Prime Minister.

At worst, it’s another in the UK social investment sector’s seemingly endless series of baleful attempts to prove that they can solve major social problems with a form of social business that’s essentially the same as conventional business but produces a few more reports.

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Putting our money where our mouth is

Do you run a social enterprise? Do you buy stuff from other social enterprises? If not, why not? These are the essential questions being asked by Social Enterprise UK(SEUK)’s new campaign Buy Social.

Having successfully convinced a corporate cloud computing giant to drop a major chunk of its marketing strategy, the umbrella body’s next trick is apparently to attempt to convince some people to do something that you might imagine they would’ve been doing anyway.

SEUK’s research shows that 1 in 4 social enterprises don’t make any regular purchases from other social enterprises at all and while, on the plus side 70% of social enterprises have at least one other social enterprise in their supply chain, only 13% said that the majority of their suppliers are social enterprises.

In response, SEUK is putting its money where its mouth is. Not only have they been buying stuff from social enterprises themselves, they’ve also posted a list of recent social enterprise purchases from their staff team. The overall goal of the campaign is to see 500 new deals done between social enterprises by Social Enterprise Day 2013 – as Social Enterprise Day is in November, that’s just over a year away.

The Buy Social campaign is itself a social enterprise partnership between SEUK and our friends at communications agency, Poached Creative, who have developed the message and the campaign materials. Poached Creative’s director, Jess Smith, has written a blog post about what her company buys from, and sells to, other social enterprises (including us at Social Spider CIC).

I think the campaign’s a really good idea. It got a clear, positive focus and is a good way of harnessing the collective energy of the social enterprise movement – particularly via social media – in a way that should actually result in stuff being sold. At Social Spider CIC, we already use social enterprise suppliers where we can including The Co-Operative Bank, The Phone Co-op and Intentionality, who have been helping us develop our social impact measurement.

I also think the campaign raises a couple of questions. One is around SEUK’s research findings on the barriers that prevented respondents buying from social enterprises: “When asked what barriers prevented social enterprises buying from others, 35% reported that other social enterprises don’t promote or market themselves to potential social buyers, and 29% had never been able to find social enterprises for the services or products they’ve needed. Very few said that social enterprises couldn’t compete on quality (6%) or price (6%) with other suppliers.

Anecdotally, the first two points are seem reasonable – and the campaign will hopefully help to address them. The stats on quality and price seems wildly optimistic. This is partly because the fact that organisation is a social enterprise doesn’t, in itself, have any effect whatsoever on the quality of an organisations goods and services, or the prices it charges. But I know at least one part of our supply chain where we stopped using a social enterprise supplier because of the poor quality of the service and at least one – our biggest spending area other than wages – where we’ve been unable to switch to a social enterprise supplier due to price.

The spending area where we haven’t been able to Buy Social due to price is printing for our mental health magazine, One in Four and other one-off publications. The frustrating thing is that it’s the one area of our activity where we’re a big enough customer to really matter. But the reason we haven’t found a social enterprise printer to do the job is not because their aren’t any social enterprise printers or because those that do exist aren’t any good – it’s because print is phenomenally competitive market and, as far we know, their aren’t any social enterprise printers who specialise in fast turnaround, high volume, low cost – which is what we need for One in Four.

Last time I checked, the Phone Co-op’s prices were pretty competitive but – hypothetically speaking – it wouldn’t be a commercial disaster if we spent £100 or so a year extra on our phone bill due to the fact we used a social enterprise supplier. Our print bill is equal to 8% – 10% of our entire turnover and that’s a very different matter. Ultimately, it’s a balancing act and, for us as a company, the position we end up at is ‘Buy Social if we can’. Hopefully, the campaign will help us to find more situations where we can.

The other question, though, is where the Buy Social campaign fits in with the wider challenge of selling our goods and services to the vast majority of organisations and people who are not social enterprises.  Some colleagues in the movement have suggested to me that SEUK’s energy could be better focused on helping social enterprises to sell to wider markets. I understand the point but don’t agree with it. Part of the mixture of idealism and pragmatism that makes social enterprise work best is that we find useful things we can do and do them – without being paralysed by the fact that we can’t do everything immediately. And an added positive is that while Buy Social is being facilitated by SEUK, it’s up to us as social enterprises to either make it work or not.

The Buy Social campaign clearly isn’t an overall answer to question of how social enterprises can sell enough products and services to keep going and grow while also delivering positive social change – but it’s useful platform for us to reach new customers who, by virtue of their stated social commitment, should already be at least partly interested in what we’ve got to offer. And social enterprises that are selling more stuff to other social enterprises, will be better placed to sell stuff to everyone else too.

 

 

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May Salesforce be with you

You’d have to have been living on the moon, or at least in a world without access leading social entrepreneurs’ Twitter feeds, to have missed this week’s successful conclusion to the heated discussion between cloud computing specialists, Salesforce and (a substantial chunk of) the social enterprise world.

For those of you who did manage to miss it, Salesforce have been using the term ‘social enterprise’ to describe their social media products and the companies who make use of them. While some in the social enterprise movement had raised concerns about this before, it was Salesforce’s recent decision to seek a wide-ranging UK trademark  that prompted UK social enterprise umbrella body, Social Enterprise UK (SEUK) to launch its campaign to protect the ‘social enterprise’ brand in response to growing demands from members.

Now, following a successful (ironically) social media based campaign based on around the Twitter hastag #notinourname, culminating in a lengthy phone conversation between Salesforce leaders and SEUK chief executive, Peter Holbrook, the technology company have backed down and will be both dropping their trademark applications and ending their use of the term ‘social enterprise’ to describe their products.

Social Enterprise Live quotes Salesforce CEO, Mark Benioff’s explanation for this about turn: “It was never our intention to create confusion in the social sector which we have supported since our founding. As a result of the feedback we received, Salesforce has decided to withdraw its efforts to trademark the term ‘social enterprise’. In addition, Salesforce will look to remove any references to ‘social enterprise’ in its marketing materials in the future.

I have to admit that despite being a strong supporter of the #notinourname campaign, I’m (pleasantly) surprised that it’s managed to deliver the desired result in such a short time. This is partly because, based on past experience, it seemed inconceivable that any debate focused on the meaning of the phrase ‘social enterprise’ could: (a) serve to bring the social enterprise movement together and (b) be resolved successfully.

Of course, Salesforce wasn’t making a contribution to the ongoing wrangle over what types of businesses are genuine ‘businesses that trade to tackle social problems, improve communities, people’s life chances, or the environment‘,  they were using the term to describe something else entirely –  with potentially serious (unintended) consequences.

Even so, this saga has revived the question of whether we need a definition of social enterprise – or ‘a social enterprise – in the UK. I used to be strongly against the idea but the Salesforce dispute is just one of several recent developments that have caused me to change my mind on the issue.

I remain skeptical about the idea that we need a definition of social enterprise to prevent the rise of ‘bogus social enterprises’. This term is most commonly used to mean people appropriating the term ‘social enterprise’ to give their business credibility when its primary focus is to generate profit for shareholders.

My problems with that argument are:

(a) there’s still not very many situations where claiming to be social enterprise will, in itself, offer you a competitive advantage.

and

(b) in situations where it might help, there’s ways to make the point without needing to actually call yourself a social enterprise anyway.

The fact that private sector back-to-work contractor, A4E, have now (rightly) been banned from suggesting they exist primarily for a social purpose suggests that the combination of regulation and public scrutiny should be enough to prevent companies describing themselves in a misleading (deliberately or otherwise) way for a long period of time.

The bigger danger – and the one that leads me to support an official definition – is inconsistent use of the term by public sector agencies when describing the organisations that they are supporting or awarding contracts to. A prime culprit in this is the recently departed Health Secretary, Andrew Lansley. As discussed previously, the Health and Social Care Act 2012, amongst its many and varied sins, says that:

“a body is a social enterprise if—

(a) a person might reasonably consider that it acts for the benefit of the community in England, and

(b) it satisfies such criteria as may be prescribed by regulations made by the Secretary of State.”

On that basis, local authorities are empowered to give the contracts to deliver the new Healthwatch service to ‘social enterprises’.

The Department for Business, Innovation and Skills (BIS) has a different definition stating that: “The term ‘Social Enterprise’ describes the purpose of a business, not its legal form. It is defined (by Government) as ‘a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners’“.

The clearly something going slightly wrong if the government’s definition of social enterprise is not even recognised by other bits of the government when drawing up legislation. But that’s because the BIS definition is not a legal definition, it’s what some ministers and civil servants have chosen to say, and some other ministers and civil servants are at liberty to ignore it entirely.

This matters now because of what’s at stake. Frankly, I couldn’t care less if, at various points in the past, woolly definition of social enterprise has led to private sector businesses receiving some free business planning training or a free Business Link mouse-mat. It’s more of an issue when there’s important services and serious cash involved.

There’s also the Public Services (Social Value) Act 2012, which will come in force next year. While being a social enterprise is no guarantee of providing additional social value, and not being a social enterprise is no guarantee of not providing additional social value, it seems likely that the fact that an organisation is a social enterprise may be a factor in commissioners’ considerations under the act.

The growth of the social investment market – however skeptical some of us might be about the way it’s currently developing – is another good reason for ‘a social enterprise’ to be defined for tax purposes.

I think the time has come for clear, inclusive legal definition that enables organisations to register as ‘a social enterprise’ and be regulated accordingly. Peter Holbrook and the team at SEUK have done a fantastic job leading the Salesforce campaign, getting agreement on a definition would be an even bigger challenge.

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Social enterprise movement battered by Salesforce winds

As if a double dip recession, record cuts in public spending and the contracting arrangements for the Work Programme weren’t enough for the social enterprise movement to contend with, the world’s attempts to prove the correctness of the late Gore Vidal’s claim that “no good deed goes unpunished” have now moved into the murky arena of intellectual property.

The problem is not that cloud computing specialists, Salesforce.com, have got anything specifically against businesses ‘with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners’, it’s just that they use ‘Social Enterprise’ for a different purpose, to define the exciting range of products they offer to help companies make effective use of social media.

This use has annoyed some social entrepreneurs for some time but the situation has escalated significantly in recent weeks following Salesforce.com’s application for a wide-ranging trademark for the words ‘social enterprise’. Civil Society reports that: “Intellectual property legal experts say an attempt by (the firm) to trademark ‘social enterprise’ is unlikely to be successful, but is possible.

Not surprisingly, Social Enterprise UK (SEUK) chief executive, Peter Holbrook, is on the robust constructive dialogue path, sending an open letter to the company while explaining that: “We’ve raised our concerns with Salesforce more than once and hope they’ll enter into a dialogue with us. With the launch of Big Society Capital, the world’s first wholesale social investment intermediary, and the passing of the Social Value Act, we’re on the cusp of social enterprise entering the mainstream vocabulary in the UK.

And adding that: “For Salesforce to jeopardise in anyway the social enterprise sector’s progress wouldn’t do much for their reputation.  We have taken legal advice and will take the necessary steps to protect the term social enterprise of behalf of all those in the sector.

SEUK are taking the right action in difficult circumstances but, while Holbrook is clearly correct to suggest that Salesforce.com’s actions are not helpful to ongoing attempts to establish social enterprise in the mainstream – as an approach that both other businesses and individual consumers are familiar with – these circumstances are partly a symptom of the failure of social enterprise to enter the public and corporate consciousness to a meaningful extent.

There is clearly no shortage of interaction between the social enterprise movement and large private sector companies. In the corporate world, anyone who’s anyone is now either running or involved in a social enterprise support and mentoring scheme. None of the schemes are bad but it’s not clear which, if any, of them take us far beyond the world of what used to be known as corporate social responsibility (CSR).

Now, the Salesforce situation raises big questions about the extent to which big decision-makers at big corporates really care about or even know about social enterprise.

That’s particularly true in the case of mobile phone company, O2 – allegedly one of the social enterprise movement’s most prominent corporate supporters. In 2010, the company announced its support for social enterprise stating: ‘This is the age of social enterprise, and 02 is welcoming it with open arms’ and then proceeded to launch both a website and  a package of services aimed specifically at social enterprises.

While some potential O2 customers within the movement may have found it difficult to identify specifically social enterprising approaches to phone use that were significantly different to those of other small businesses – and others may have preferred to buy their services from a social enterprise – it was definitely a nice idea.

Given O2’s apparent enthusiasm for our movement, readers familiar with Private Eye’s ‘Just Fancy That’ might be surprised to see the company making this contribution to Salesforce.com’s attempts to promote their alternative version of social enterprise. While Business Director, Ben Dowd and Head of Business IT, Steve Thurlow, are clearly being enthusiastic about something – and with my limited knowledge of their field, I’ve got no reason to doubt that they’re putting that across very well – it’s pretty clear that the ‘social enterprise’ they’re talking about is not our version.

This obviously doesn’t mean that O2 have actively ditched the social enterprise movement and are now opposed to it but it does suggest that their support was always a fairly peripheral element of their (extremely large) business – headed up by individuals employees with a genuine commitment to (our version of) social enterprise but without wider support within the company. In the same way that the head of Business IT would (quite reasonably) not be expected to have a detailed knowledge of all the charities O2 staff might be running the marathon for this year, neither would he be expected to know about the little-known alternative approaches to business that they might be attempting to give a helping hand to (while also hopefully flogging them some services).

In terms of the matter in hand, we have to hope that Salesforce don’t receive a trademark for a phrase that had widely used to define a movement of thousands of organisations, serving  millions of people, before they started using it but we should also take this as an opportunity to reconsider of relationship with the corporate giants that taking an interest our sector.

There is a big danger that – following cuts to public spending – many social enterprises, who previously had a ‘business plan’ based primarily on the idea that sooner or later the government would just give them lots of money to do really good stuff, will be tempted to replace the words ‘the government’ with ‘XZY Corp’s corporate supply chain’ and keep on following the same plan.

This may well be (a bit of) the best business model currently available if you’re a social enterprise support agency but it’s definitely not the best approach if you’re running a social enterprise media training organisation in Milton Keynes or a social enterprise bakery in Hull. Most social enterprises will succeed (or fail) by selling (or not selling) stuff to people who want to buy to stuff.

Most of us in the movement believe that there’s a value in the idea of social enterprise entering the mainstream so that more people actively look to buy from social enterprises, and also so that more dedicated and talented people choose to start social enterprises themselves. But mainstream knowledge of the term ‘social enterprise’ will not make unprofitable businesses profitable. In terms of existing social enterprises, if we’re not successful over the coming years it won’t be the fault of Salesforce (or corporate social enterprise support schemes). It will be because we weren’t able to sell enough stuff for less than it cost us to produce it.

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After the goldrush – Reflections on Social Enterprise Exchange 2012 (part one)

Last year’s annual social enterprise conference, Voice11, saw five government ministers join the shivering throng at the O2 centre in London. This year, Social Enterprise Exchange – a joint event put on by Social Enterprise UK (SEUK) and Social Enterprise Scotland – featured warm sunshine in Glasgow but no UK government ministers at all. Nick Hurd, the minister for civil society, did send a video message…

In his blog on the event, David Ainsworth of Third Sector says: “there was a general feeling that the government had tried some things, didn’t really get what was needed, and had now lost much of its initial enthusiasm for the sector.

Nick Hurd memorably claimed in the early days of the coalition that while there would be smaller cake (in terms of public spending under the new government), civil society would get a bigger slice of that cake. In fact, the government’s policy has been an exagerrated continuation of New Labour’s policy of talking loudly about public services being contracted out to smaller organisations in the community, while directing all the serious cash from public service delivery into the bulging wallets of private outsourcing companies.

While accelarating the creation of an oligopoly of corporate outsourcing monsters, New Labour did also provide considerably funding for social enterprise development. That goldrush is now over and, while there’s still plenty of consultants working in social enterprise, those that are still plugging away are mostly those with strong ideas about what their consultancy is meant to achieve – as opposed to specialists in hoovering up cash for churning out generic business plans and advice sessions on getting loans.

My feeling, significantly reinforced in Glasgow, is that social enterprise – a movement that expends significant intellectual and emotional resources deliberating what it is – is being galvanised by the opportunity to state clearly what it is not, while social entrepreneurs are getting better at explaining the benefits of what they do.

In his opening remarks at the conference, SEUK chief executive, Peter Holbrook, stated: “Bringing a pure profit model to work with the most vulnerable people does not make sense” while in her closing remarks, SEUK chair, Claire Dove, was equally blunt in contrasting social enterprise with the approach of a controversial back-to-work provider: “Thinking about A4E. If I had £8.6 million, what would I do? How many jobs would I create? That’s what the CEO took home. It’s absolutely scandalous.

The overall impression of the conference for me was of anger about the way things are, blended with grim determination to keep going in spite of everything and then combined with an underlying sense of optimism. The workshops that I attended (see part two) were notable for a massive reduction in vacuous bullshit about social enterprise being really nice and ‘so innovative’, with a corresponding increase in practical, sensible advice for people wanting to get on with doing social enterprise.

The lunchtime plenary ‘Good Business and how to do it’ to a ‘big picture’ looked at the role of social enterprise – particularly in the UK – after ‘the world financial catastrophe’. Newsnight’s Kirsty Wark was an engaging chair who seemed to have unusually strong understanding of the issues for a mainstream journalist.

On the panel, Shadow Business Secretary, Chuka Umunna, started by asking: “I’m not the shadow minister for social enterprise – why am I here?” While his enthusiasm for social enterprise was clear, his contributions didn’t entirely answer the question but he spoke strongly on the need to meet the needs of emerging markets and of creating an economy that was “not just about consuming things“. He also talked about an economy focused on long-term value creation rather than short-term profit.

Paul Monaghan from The Co-Operative Group was keen to emphasis the political nature of social enterprise past and present. He challenged the popular image of the Rochdale Pioneers, regarded as the founders of co-operative retail, as men with cloth caps and whippets who just wanted to run a local shop. He pointed out the the Pioneers were Chartists and that their political agenda included developing social housing and ultimately ‘owning the means of production‘ co-operatively. He said that: “Good business is doing the right thing – even when there isn’t a business case – and staying politically engaged” and that if it was easy, everyone would be doing it.

Chris Dabbs of Unlimited Potential, asking a question from the floor, raised doubts about the (currently popular) idea of ‘responsible capitalism’ saying: “I didn’t come into social enterprise to be a capitalist” and that he supported a different economic system based on social benefit. This prompted a discussion on what people meant by capitalism. Paul Monaghan complained that capitalism had come to mean “the people putting up the capital get all the surplus.” He called for a better awareness of different models saying: “we use PLC as synonymous with capitalism, it’s not.”

Panelist, Sophi Tranchell, of Divine Chocolate, pointed out that: “There are different ways of doing business and they are significantly different.” She called for business models based on involving workers in decision-making and generating profits for “many people not few.” She challenged corporates to adopt social enterprise approaches saying: “they can join us if they want to.” She also said that mainstream businesses should be made to report on their social impact so that customers could take that into account when deciding whether or not to buy their products.

Fellow panelist, Jim Duffy, of Entrepreneurial Spark, which supports start-up social enterprises in Glasgow and beyond, emphasised that mainstream business would always have a role saying: “We need capitalism. We need that growth and you’re never going to change that.” His organisation had successfully sourced funding from business leaders, including Sir Tom Hunter, to pay for free office space for social enterprises.

It was a discussion focused on ideas rather than practical answers but it reinforced the impression that the social enterprise movement is moving away from a heavy focus on public service delivery – though this will clear remain important – towards playing a bigger role in the wider economy. More in part two.

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Remploy factories to close

Disabled people are tired of being painted in the headlines as scroungers and just ask for the individual support we need to have a fair opportunity to work alongside everyone else.

So says Phil Friend, Vice Chairman of Disability Rights UK (DRUK), talking to the Daily Telegraph about the government’s decision to shut 36 factories run by government-owned supported employment company, Remploy, at a cost of 1752 jobs. The decision is part of the government’s response to the Sayce Review – published last year – which looked at how the government could better support more disabled people to get into mainstream employment.

There are (at least) two keys reasons why many in the disability rights movement (and beyond) actively welcome the move to close Remploy factories. One is cold hard economics: “Last year Remploy, which accounts for a fifth of the Government’s £320 million budget for specialist disability employment services, lost £68.3 million. Ministers say that it costs the taxpayer £25,000 to keep one Remploy factory worker in their job each year, and yet the factory bosses are paying many of their employees to do nothing, because of a lack of orders.

The other is that, as Phil Friend’s comment illustrates, many disabled people see the Remploy model of segregated supported employment as patronising and out-of-date – believing that both government funds and mainstream employers should instead be focused on removing barriers that prevent disabled people from entering mainstream employement.

It’s at this cross-section of economics and disability politics that the issues for Remploy become particularly complicated. Len McCluskey, leader of the trade union, Unite, which represents many Remploy staff reacted to the closure by stating: “To choose to cut these jobs… is proof the Government has no intention of helping the most vulnerable in society.

While it’s not surprising that a union leader is opposed to his members losing their jobs, the broader view that disabled people are vulnerable and need looking after by the state contrasts strongly with the outlook of DRUK and other activists who believe disabled people have a right to support that will enable them to gain work on equal basis to other people, as opposed to special help based on their vulnerability.

Disability campaigner, Kaliya Franklin, is broadly sympathetic to the DRUK view in principle but believes it fails to take account of the likely reality of life in the job market for former Remploy employees once their factories have been closed. She asks: “What about the employment prospects for those Remploy staff now redundant? Did anyone consider that of the previous employees made redundant from Remploy factories only eight per cent have been able to gain employment since? Why were proposals from workers to merge factories with valuable, well equipped, viable manufacturing space completely ignored?

Whether or not we believe that Remploy’s current model is sustainable in the long-term or that its continuation is even desirable, the reality is that more than 1500 disabled people will soon be out of work and facing limited prospects for future employment. As the above quote suggests, governments of various stripes have a dismal track record in terms of helping people thrive in the world beyond supported work.

Many in the social enterprise movement are surprised that the government hasn’t seriously considered the option of supporting Remploy employees to move from supported employment to working for viable social enterprises.

Sally Reynolds, co-founder and former chief executive of Social Firms UK – the umbrella organisation that supports market-led social enterprises creating good quality jobs for people disadvantaged in the labour market – says: “For some obscure reason it’s missed mention thus far, but Remploy has been running a number of social enterprise pilot projects across the country for the last two years. These projects have shown that there are significant opportunities for those pilot project sites and possibly many of the other sites earmarked for closure…

Unbelievably, despite all of the work and effort put in over the last two years, the five social enterprise pilot sites are included within the round one phase of 36 factory closures, giving only a 90 day consultation period for exit strategies and proposals to be given consideration.

It’s possible that some of the businesses created by Remploy’s social enterprise projects may be able to continue if they secure investment from elsewhere but it seems strange these sites haven’t been given longer to enable an assessment of whether or not the model is sustainable.

On balance, it’s probably the correct decision, but in terms of the broader questions about how the people most disadvantaged in the labour market might find jobs, this round of factory closures at Remploy is a decision that raises more questions than it answers.

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