Tag Archives: urban forum

Knowing your rights

To Stratford last Wednesday for East London’s event on the government’s new Community Rights, organised by Urban Forum (where I am a trustee) and Locality.

The Localism Act 2012 gives communities four new rights: Community Right to Build, neighbourhood planning, Community Right to Challenge and Community Right to Bid. The first two of these are well explained by their names. The Right to Build provides communities with: “the right to build small-scale, site-specific projects without going through the normal planning application process” while the right to neighbourhood planning gives communities the right to draw up a plan for their area. Neither of these Rights are simple to exercise and, based on discussion at the event, it seems that in London at least, it may be quicker to go through the existing planning permission process than to use Right to Build.

Right to Challenge and Right to Bid are more cryptically named. The Right to Challenge is not a right for communities to challenge the decisions of councils (or anyone else), it’s a right to express an interest in delivering services that are currently delivering by the local authority or fire and rescue services ‘where they think they can do it differently and better‘.

The basic process is that, if a community group – usually a charity or social enterprise – thinks they could run a particular service better than the local authority (or service), they can put in an ‘Expression of interest’ which the local author has to consider. If the local authority accepts the challenge, the group making the challenge does not necessarily get to run the service – it’s put out to tender and anyone can bid to run it.

Slightly less confusingly, the Right to Bid does give community groups the right to bid ‘to buy and take over the running of assets that are of value to the local community‘. Of course, broadly speaking, anyone has the right to bid to buy anything from anyone else at any time. Things only become difficult when it comes to the questions over whether the owner wants to sell and whether the buyer can afford to buy.

The more specific use of Right to Bid is that it enables community groups to nominate assets of community value which the local authority has to consider adding to a local list of community assets. If a building is put on the list then – if and when the owner decides to sell it – community groups have a six-month window to raise the funds to make a bid to buy it.

As Annemarie Naylor of Locality’s Asset Transfer Unit explained at the event, whether or not Right to Bid  enables lots of community organisations to buy lots of buildings if the owner doesn’t want to sell to them, the process will enable community groups to demonstrate to the local authority that particular buildings are valued by the community.

The other people on my table at the event were mostly from relatively small local community organisations. The general feeling was that while it was good to be aware of these new Rights coming into existence, they were unlikely to be directly applicable to what we were doing.

Although the practicalities were clearly explained by Locality’s Glen Arradon, there was confusion about the motivations behind Right to Challenge. Some said that, as they understood it, the government’s policy was to contract out as many public services as possible anyway so they couldn’t understand why an extra mechanism was needed or why community organisations needed to be involved. Others felt that while some local authorities might be keener to put services out to tender than others, there was no clear value in community organisations trying to make them do so if they didn’t want to – as the most likely result would be that the contract would end up going to a private sector provider anyway.

The key benefit of the Rights for charities and social enterprises seemed to be that, while they might not be practically useful in themselves, their launch had been accompanied by the launch of a grant funding programme, managed by the Social Investment Business, to support organisations looking to buy property or take on the running of public services – whether or not they specifically used the Rights to do so.

While there may be scepticism, many local authorities have already set up websites instructing local organisations on how to make use of the new Rights – such as this one on Right to Challenge from Hammersmith & Fulham – and the rest will ultimately have to do so.  Some organisations definitely will attempt to use the Rights, some local authorities will welcome that.

Locality’s My Community Rights website provides further guidance on what the Rights are and how to make use of them. As the debate about charities and social enterprises running public services (and taking on community assets) intensifies, these Rights will definitely be part of the discussion. It’s too soon to say how big a part of it they’ll be.

 

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Not particularly social, not particularly enterprising

That’s Urban Forum* chief executive, Toby Blume’s tough verdict on (some) social enterprises. Aside from being Third Sector‘s quote of the week, Toby expounds this view at greater length in an engaging blog post. As Toby acknowledges, charities and conventional businesses are not all perfect either – I could come up with very long list of charities who don’t even fit my definition of ‘charitable’ in theory, let alone in practice.

Toby’s blog is primarily a distillation of points that pragmatic social entrepreneurs and many others in the (wider) voluntary sector have been making for a long time but it’s a set of arguments that is becoming more important as the government-sponsored bandwagon that social enterprise leaders first jumped aboard under New Labour is now careering towards the world of mainstream public service deliver at a ferocious pace. As Toby explains:

“The government (and for that matter the last lot too) seems to see social enterprise as the answer to public service reform, funding for the not for profit sector and pretty much everything else. And it’s easy to see the attraction – save money and be seen to be supporting good causes (and I mentioned saving money, right?). Social enterprises, for their part, are generally happy to keep quiet, pick up the cheques and concentrate on doing the things they want to do…and who can blame them?”

Without getting into a debate about Toby’s personal experiences of existing social enterprise public service delivery – he doesn’t mention whether he’s raised his concerns about his local provider’s customer service and management approaches through that organisation’s complaints procedures, and I’m sure the organisation in question believe that their services are of a high standard – the point is that there’s no guarantee that a social enterprise will provide better public services. And, of course, that the government is hoping that they’ll be able to provide services cheaper.

Aside from the important debate over whether and how social enterprises are able to provide public services cheaper, I think that the social enterprise movement currently has some work to do to meet the challenge of explaining what we mean by socially enterprising public services. As Toby points out, an asset lock may be desirable in an organisation delivering public services but it’s not, in itself, a benefit to people who use their services. The council has an asset lock. Focusing too heavily on social enterprise structures risks a descent into the political argument that social enterprise is ‘not as bad as privatisation’ when what (hopefully) matters most is to explain why social enterprise public services are actively good, based on people’s experiences of using those services.

Beyond public services, though, Toby’s other key point is that social enterprise is a relatively small part of the economy – both in terms of the voluntary sector and conventional business – and that a focus on social enterprise risks distracting us from the issue of making the economy as whole work better for everyone within our society:

“If anything like as much political and financial backing were put into making private sector businesses more social as goes in to supporting social enterprise we could achieve real transformative positive social and economic change.”

This point was made, from a slightly different angle, by the Social Enterprise Coalition (SEC) in their recent paper, Time for Social Enterprise.

“Like many others before them, this Government is in danger of tackling social policy and economic policy in isolation from one another. A number of recent government initiatives have been introduced with the intention of rebalancing the economy and promoting economic growth… Their success is measured in terms of jobs and GDP. Tangential to these are policies designed to engage communities and civil society and realise the Big Society vision. Policies such as the right to buy and right to challenge in the Localism Bill, citizen action initiatives and the mutualisation of public services. But the world doesn’t work in this segmented way and a change in the business environment is needed to ensure the opportunity for change is embedded and the UK becomes truly fertile to social change and innovation.”

Included amongst the recommendations at the end of Time for Social Enterprise are:

” – Charities, social enterprises, research institutions and Government work towards a standardisation of how we measure social value and how businesses are expected to report it.

– The social enterprise movement, consumer organizations and Government work together to produce a business and consumer education strategy to ensure that the workforce and consumers can choose social value when they spend, save, earn and give.”

These recommendations are very sensible ones although the key partners apparently missing from these suggested bits of work – if (at a pinch) we accept that customers are represented by consumer organisations – is businesses themselves. Surely people who run businesses (and work for them) should be at the heart of discussions about the social role of business. This is not an argument in favour of embarrassing, tokenistic sackcloth-wearing exercises such as Project Merlin. It’s about working out how we’re going to feed ourselves, keeping ourselves warm and live the most fulfilling lives we can in the years to come, while enabling everyone in our society to have the opportunity to do so.

Rightly or wrongly, most of the businesses that currently provide the most important (material) things or services for most people are not social enterprises. I, as a social entrepreneur who produces some pretty good magazines, websites and training, don’t really feel that the nation would benefit greatly from me telling lots of people who do know what they’re doing – in terms of building houses, selling groceries or organising package tours to Spain – my clever ideas about why they’re doing it completely wrong.

The danger for the social enterprise movement is that it ends up trying to choose between being fawningly deferential to a few rich business-people or incongruously patronising towards the 98%+ of people who work in the UK economy but don’t work for social enterprises. Many social enterprises have great stories to tell, some of which are relevant to conventional businesses. We also have the ability to play a bigger active role in the economy but delivering a more social economy is a massive task for government, business, civil society (including trade unions) and individual citizens. I think we’re an important part of it but we’re only part of it. Realising that is a key factor in the social enterprise movement establishing greater credibility and starting to make a bigger social impact.

*I am a trustee of Urban Forum but the views expressed here are my personal views.

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Lost in definition

Yesterday I (metaphorically) slung my beanbag over my shoulder, picked up my Oyster card and headed off to talk to some socially enterprising people. Other than being clever people with lots of good ideas, one thing that Amanda Jones of Red Button Design and Toby Blume of Urban Forum (interviews to follow in the next few weeks) have in common is that their organisations would not fit the current government and Social Enterprise Coalition definitions of a social enterprise.

In the case of Urban Forum, as Toby reflected ruefully, this is because a drop in public funding has meant that members have less resources available to buy their services so they no longer get 50% of their income from trading activities, for Red Button Design, the ‘problem’ is that – as many social enterprises claim to do – they really are seeking to provide a business solution to a social problem and they’ve raised money from private investors to enable them to do so. To put up £250,000 of their own cash, those investors need to be able to get a reasonable return.

These are just two examples of the ongoing problems we have defining social enterprises. Enter the Third Sector Research Centre (TSRC) with a piece of research that raises some serious questions about current descriptions of the scale of social enterprise and the varying definitions used to produce those figures, based on analysis of a number of surveys conducted in recent years.

The Social Enterprise Coalition currently claims that there “are 62,000 of them in the UK, contributing over £24bn to the economy, employing approximately 800,000 people“. In claiming this they site  “2005-2007 data from the Annual Survey of Small Business UK“.

The new TSRC paper doesn’t challenge whether or not this is true but questions what it actually means. The starting point for the Annual Survey of Small Business (ASBS) figures is this:

“This is the most quoted sources of information on social enterprise in the UK, being found in political documents and speeches of politicians of all parties as well as a range of lobbying organisations, and academic publications. The data presented in the past has been superficial, providing a single overall figure of a minimum of 55,000 social enterprises (rising in 2009 to a minimum of 62,000 based on a three year rolling average for 2005 – 2007).”

The biggest problem with the 62,000 figure is the process used to produce it and the large degree of interpretation involved. Based on the then DTI’s definition of social enterprise – ‘a business with primarily social/environmental objectives, whose surpluses are principally reinvested for that purpose in the business or community rather than mainly being paid to shareholders or owners‘ – small business completing the survey were asked to self define (or not) as social enterprises based on four conditions.

They should:

think of themselves as a ‘social enterprise’ (Q37 in the 2006/07 survey)

never pay more than 50 per cent of profits to owners/shareholders (Q36)

generate more than 25 per cent of income from traded goods/services (or receives up to 75 per cent of income from grants and donations) (Q34A)

think that they are a very good fit with the DTI definition of a social enterprise (Q38)

The 62,000 figure is based on a stratified sample so the actual number of small business (big enough to have employees) surveyed that identified themselves as ‘social enterprises‘ on this basis was 151 out of 2535 businesses surveyed. 88.7% of those 151 ‘have a legal form than places no constraints on the distribution of profits‘.

This 88.7% – reasonably enough – have stated that they ‘never pay more than 50 per cent of profits to owners/shareholders’ but have not answered (because they’ve not been asked) the implied question from a social enterprise point of view ‘do your governing documents allow you to distribute more than 50% of profits to owners/shareholders?’

As the TSRC’s researchers suggest: “The retention of at least 50 per cent of annual profits for reinvestment within the business is not unusual for growth oriented businesses and would not in itself be indicative of a social aim.” The point being that there’s no clear evidence from the ASBS that 88.7% of the notional 62,000 social enterprises in the UK are anything other than fast-growing small business choosing to invest half their profits or more in employing more staff.

For those of us who believe that ordinary companies limited-by-shares who are primarily focused on social outcomes are just as likely to be social enterprises as any other company formation, it’s not evidence that some or all of these companies aren’t social enterprises but it’s not evidence that they are – and it’s certainly not evidence that they’re social enterprises on the Social Enterprise Coalition or the government’s terms. And it leaves us in a situation where, if the 62,000 figure is worth the paper it’s written from, that paper probably didn’t come from a sustainable source.

That said, the conclusion to draw from this is not that there’s necessarily less than 62,000 social enterprises in the UK. The TSRC research also points out that as the ASBS is targeted at organisations that regard themselves as small businesses and therefore misses many social enterprises who regard themselves as part of the third sector. So according to the ASBS figures, there are only 8,000 social enterprises that are Companies Limited by Guarantee, Co-ops, Friendly Societies or Community Interest Companies, while the 2008-2009 Cabinet Office-funded National Survey of Third Sector Organisations found 16,000 third sector social enterprises that self-defined as social enterprises, while 21,000 third sector organisations were generating more than 50% income from trading but not self-defining as social enterprises.

If you’re still with me at this point I imagine your head might be beginning to hurt. And ultimately, if you’re a social entrepreneur, you probably spend little or no time wondering about whether there’s 37,000, 70,000 or 230,000 social enterprises in the UK. You’re interested in delivering social change while somehow managing to pay the bills. But this stuff matters because the social enterprise lobby and politicians use these stats to justify their own status, in the case of the lobby, and their spending decisions, in the case of politicians.

It’s perplexing that the Social Enterprise Coalition are happy to continue to use the ASBS 62,000 figure to explain the scale of social enterprise in the UK when 88.7% of those business do not meet its definition of social enterprise, would not be eligible for the Social Enterprise Mark and would not receive services and support from their organisation. Readers can judge for themselves the extent of any meaningful connection between the TSRC’s report and the comments issued by Social Enterprise Coalition Chief Executive, Peter Holbrook, in response to it.

The reality is that the social enterprise movement is not agreed on the definition of what a social enterprise and the lobby currently has no meaningful evidence on the scale of social enterprise activity meeting the definition it supports. The TSRC report mainly serves to highlight the extent of the confusion. The TSRC researchers conclude with the statement that:

It is recommended that future surveys are clearer about what they are measuring, which sample frames they are drawn from, and most important, why they are doing so.

This is sensible advice but the bigger lesson for the social enterprise lobby might be that we’ve reached a point where they should consider spending less time about talking about the volume of social enterprises in the UK – however they’re defined – and more about the positive social change that is being achieved and could be achieved be social enterprises and social entrepreneurs operating under a wide spectrum of organisational structures.

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