Thought Leadership

Keen observers of social media will have noticed that Social Enterprise UK attended the Conservative Party Conference this year, one that will live long in the memory for the news and content it generated. As with Labour, we were there to understand the future direction of policy and to raise awareness of the social enterprise sector. Social enterprise and levelling up Away from the headlines, there were some positive references to social enterprise and recognition of the value of the sector. On Sunday, the New Social Covenant Unit launched a new paper called “Social Capitalism” (covered in the Times and on Radio 4), authored by 12 Conservative MPs.   The paper made the case for investing in our social infrastructure, the local institutions that make up our communities, and treating it as seriously as our physical infrastructure (roads, railways, broadband). The paper made numerous references to social enterprises from the importance of social enterprises in maintaining this social infrastructure to social enterprises delivering public services in a way that listens and works with communities creating stronger bonds between people. This will require investment in the sector, reform to the way that we deliver public services and greater support for communities to develop social enterprise solutions. The paper was launched by the former Levelling Up Secretary Michael Gove and Dehenna Davison, the new Minister for Levelling Up, who both endorsed the vision outlined in the paper. We will be taking this forward to see if warm words can be turned into strong action to support social enterprises and realise their potential to level up the country. There were also positive references to social enterprises at a number of different events, particularly those organised by the sector such as those from Social Investment Business and Big Society Capital. Overall, there was a sense at conference that “enterprise” was the way to help communities to level up – although without a clear sense of what government was doing to stimulate this enterprise. No plan for growth or public services The centre piece of the conference was “growth” and how the government was going to deliver growth. It is clear that accelerating the growth of GDP is going to be the central focus of the government. The problem is that there is simply no plan to deliver it beyond tax cuts. Social enterprise is one of the fastest growing forms of business in the country, yet the ideological view from No.10 is that the business of business must only be business. There is no recognition that alternative approaches putting social and environmental purpose first could drive faster growth and generate greater resilience through encouraging long term investment in people and places. The main positive of the Mini-Budget and its fall out is that the shallowness of the position on tax cuts has encouraged politicians and the media to think more broadly. If tax cuts won’t work, what will improve our economy? The fact that noted economist, Kate Raworth, was invited to speak on Radio 4 in the wake of the Prime Minister’s speech is a recognition in the media that we need a national conversation on what drives growth beyond tax cuts and deregulation. Social enterprises will need to fight to be heard but for the first time in a while, a genuine debate is emerging. The other concerning area is public services. Under the radar of conference, the government announced that departmental budgets would not see their funding increase by inflation. Effectively that is a cut of £18bn for government departments and these savings will be passed through the system, with public services and welfare budgets likely to come under severe strain. Schools and hospitals alone are estimated to have to find £11bn in “efficiency savings” to make up for rising prices. Given the state of public services after a decade of austerity and the impact of COVID, this feels untenable. Backbench Conservative MPs were clearly worried about the impact of further cuts to spending and once Ministers face the reality of these spending reductions, some form of rebellion feels likely. However, the embattled state of the government means that there is no guarantee that this policy will be changed. Social enterprises delivering public services should plan for a difficult two years ahead. A tale of two parties The overriding sense of this conference was a party divided. On the one hand, those that have a more holistic view of society and the economy are concerned that this government is heading in the wrong direction. On the other hand, those that want to see government get out of the way and cut taxes for business feel that they simply need to stay the course. Their plan will work, if it is given time. In the middle are a lot of MPs and activists who do not know what to think. Who will win out in this battle, it is hard to say. Either way, Social Enterprise UK will keep engaging with politicians on all sides to recognise the value and importance of social enterprise for our future. The fastest way to grow our economy and have high quality public services is to grow social enterprise. By Andrew O'Brien - Director of External Affairs at Social Enterprise UK

As we wrote earlier in the summer, HM Government is running a consultation on how the English portion of reclaimed dormant assets should be spent (dormant assets being a financial product, such as a bank account, which has not been used for many years, and which the provider has been unable to reunite with its owner despite efforts aligned with industry best practice)The last round of dormant assets helped to create Big Society Capital and laid the platform for the social investment market. It created the Access Foundation. It created Fair For All Finance and the Youth Endowment Fund. These are all significant investments and interventions. Dormant assets matter.The consultation lasts until 9th October (this Sunday) and as promised, Social Enterprise UK has put together a template which you can download and send to the consultation – saving you time whilst making sure your voice is heard What do you need to do in five easy steps Download the template response. Insert the name of your social enterprise (Q2), the sector you work in (Q6) and the geography that your social enterprise operates across (Q8). Check that you are happy with the template response and add in any additional points you would like to make. Email dormantassetsconsultation@almaeconomics.com with a copy of the template and cc our Director of External Affairs - andrew.obrien@socialenterprise.org.uk so we can track response rates. If you are super-keen, you can also tweet @DCMS to tell them you have taken part in the consultation and you want dormant assets to help grow the social enterprise sector. Something like: I’ve taken part in the Dormant Assets Consultation 2022 because I want @DCMS to use dormant assets to invest in #socialenterprise through social investment and Community Wealth Funds. Once you have hit send you’ve done your bit to help the sector! What we are calling for We have two simple asks. One is for more money for social investment to address the issues raised by the Adebowale Commission on Social Investment.The Commission found that whilst social investment had helped some social enterprises, it had not fulfilled its potential due to a lack of flexible capital which could be deployed to provide “enterprise-centric” finance. It also found geographical and racial inequalities in the distribution of social investment.The Commission made several recommendations to address these challenges including the creation of a £50m black-led social investment fund to tackle inequalities faced by black-led social enterprises, putting more investment into place-led infrastructure and creating a “Frontiers Fund” to provide capital to give flexible finance into social enterprises.We need dormant assets to resolve these issues, to reform the market and get social enterprises the access to finance they need. Our second ask is to support the development of Community Wealth Funds. These funds would distribute locally administered pots of money which would be used to provide patient funding for social infrastructure – the community spaces and social enterprises that we depend upon and bring us together. This proposal is being championed by the Community Wealth Fund Alliance which includes Social Enterprise UK. We need to invest in our communities and dormant assets can provide some of the resources to do that.Both of these can be funded through dormant assets and they compliment each other. Don't miss your chance to have your say Unfortunately, just reading this email and nodding along won’t be taken into consideration by DCMS.The only way to have your say is to fill in their survey or download our template response and email it in (which will be quicker, I promise!).At a time when social enterprises need help to grow and sustain themselves, you can do your bit to help our sector get access to £738m of dormant assets.Don’t miss your chance to influence the decision By Andrew O'Brien - Director of External Affairs at Social Enterprise UK

This week the Labour Party gathered in Liverpool to mobilise its supporters, discuss policy ideas and develop their pitch to voters. It isn’t a secret that the mood in the Labour Party was very confident with events in the City and the financial markets only strengthening the sense within Labour that they could be on the cusp of returning to government. But what would a Labour Government mean for social enterprise? Would this be a new dawn for the sector? Don’t frighten the horses If there was a theme for the conference (beyond the strapline: A Greener, Fairer Future) it was responsibility. Labour wants to be seen as responsible stewards of the public finances. They want to be seen as responsible custodians of the NHS and public services. They want to be seen to be responsible on climate change. This responsibility manifested itself as a desire to avoid doing anything that could spook the media or business. Yes, Labour would create a new energy company – Great British Energy. But it will not sell energy directly to customers, that will remain with the current market providers. It won’t be nationalising any existing companies, it will work in partnership with what is already there. Yes, Labour will create a new National Wealth Fund, taking stakes in the projects the state invests in. But this is not new money. It is essentially a sub-section of the £28bn Labour has already promised on net zero. Yes, there would be more money for the NHS – but it would be funded by reversing the scrapping of the 45p tax rate – worth around £2bn a year or 1.4% increase. This is not to say that these are bad ideas. Far from it. However, those expecting that a massive poll lead was going to unleash radicalism or significant investment in public services are misjudging the mood. At the moment, the closer that Labour feels to victory, the more cautious the party becomes. All business is good business? Social Enterprise UK attended a number of events and discussions at the Conference on business. The mood was generally positive. Labour wants to collaborate with business and businesses, seeing the way the wind is blowing, want to collaborate with Labour. Again and again the phrase “partnership with business” echoed throughout the meeting rooms. Labour would not “lecture” business. Labour believed that businesses want to do the “right thing”. But do they? Is all business good business? Business can be a powerful force for good, but that does not mean that all businesses are interested in unleashing that potential. This is where Labour needs to be more sceptical and look back on the performance of the British economy over the past forty years. If business as usual really worked, would we be in our current situation?  In parts of our sector, there is a view that given the alignment between the values of Labour and the values of social enterprises, a future Labour Government would naturally be a strong supporter of social enterprise. Investment and support will naturally flow from their electoral victory. The truth is more complicated. There was some good news at Conference. Social enterprises were referenced in Labour’s new industrial strategy, as was social value. The Deputy Leader of the Labour Party, Angela Rayner, announced higher standards in public procurement – which we understand will include strengthening social value to help more SMEs and social enterprises. However, we still have work to do to convince Labour that talking about and investing in social enterprise is not rebuking the rest of the private sector, it is a pro-business measure. We have to remove that hesitation and get Labour to see social enterprise for what it is – the fastest growing form of business in Britain, firmly in the mainstream of our economy. Labour should not be worried about social enterprise, it should embrace it. If we can do this, we can get the investment and support our sector needs and make our economy fairer and greener for all. That will be Social Enterprise UK’s mission from now until the next election.   By Andrew O'Brien - Director of External Affairs at Social Enterprise UK

28 September 2022 Beam, a social impact startup supporting homeless people and refugees into stable jobs and homes, has been named one of the UK’s top 15 startups by LinkedIn. Other companies on LinkedIn’s 2022 list include Monzo, Revolut, Multiverse and Octopus Energy. LinkedIn’s prestigious annual list, now in its sixth year, features 15 UK companies that are rising to the challenges of the moment and continuing to innovate and gain attention in 2022. Launched in 2017, Beam uses crowdfunding to remove the financial barriers facing homeless people and refugees. It then matches them with forward-thinking landlords and employers like Arriva, Bupa and Pret. Last month, the company reached a milestone of supporting 1,000 people into stable jobs and homes.  Beam’s 70-person team is headquartered in Hoxton, East London but operates in England, Scotland and Wales with ambitions to operate globally. Alex Stephany, Founder & CEO of Beam, said: “Over the past 12 months, the Beam team has more than doubled in size and continues to attract talent from the world’s best startups and scaleups looking to use their skills to accomplish truly meaningful work. Beam’s goal is to become the most positively impactful company in the world, and redefine the positive role that business can and should play in society. Being named by LinkedIn as one of the UK’s top 15 startups is an exciting validation that we’re on the right track.”  LinkedIn Top Startups leverages exclusive LinkedIn data focused on member actions on the platform, including employment growth, engagement with the company and its current employees, job interest, and attraction of top talent. More information on this year’s winners can be found here. beam.org

Anna Devitt and Pritam Josephs from the EY Foundation joined us to tell us more about Accelerate - a programme that supports young social entrepreneurs and social enterprises with a focus on supporting young people into employment, education, or enterprise. It provides 1:1 business coaching, tailored workshops & webinars, networking events and project support resources from EY. https://www.youtube.com/watch?v=B621wOwVKTA

14 September 2022 This webinar hosted by Alison Smith, CEO of social enterprise Roots HR looked at ways of how organisations can ensure their recruitment practices are fair and how they can limit unconscious bias from influencing decision-making. It also looked at what you can do to make the recruitment and selection process itself more inclusive in order to attract more diverse candidates. Listen to the recording below: https://www.youtube.com/watch?v=fIqx5SqalHY

After weeks of waiting, we now know what the new Government is going to do to help social enterprises, and other businesses, through the winter and the current energy crisis.   Here is a quick analysis of what all the announcements mean for social enterprise and what the next few months could hold for our sector. Energy price cap All businesses, voluntary organisations and public sector organisations who are on a non-domestic contract, a fixed price contract agreed on or after April 1st 2022, in the process of signing new fixed price contracts, on deemed/out of contractor variable tariffs or on a flexible purchase or similar contract will see a general discount applied to their bills. A price has been set for energy at £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas. A comparable rate will be set for Northern Ireland which is in an energy market with the Republic of Ireland. This rate compares with the expected whole cost of energy of around £600 per MWh for electricity and £180 per MWh for gas. So the announcement represents a significant discount. However, it is important to bear in mind: Your energy bill will still be going up – although the discount will substantially reduce the increase, bills will still increase. To give a sense of the change, the FSB calculated that the cost of electricity for businesses had increased by 349% between February 2021 and August 2022. Energy bills may still double compared to the previous year and it is worth planning accordingly. Your bill is also determined by how much energy you use, if you use more energy this winter for whatever reason, it could be higher still. This support is only due to last for six months – there is no guarantee that this will continue beyond March 2023 and you should plan accordingly. SEUK is calling for an extension until the energy crisis passes, but there is no clear indication from government whether it is going to listen to that advice. Energy bills are not the only things driving inflation – supply chain pressures, higher costs of materials, the fall in the value of the pound relative to other currencies and higher wages will all feed through into inflation. Inflation may be slightly lower than expected due to this announcement but is expected to be at historic highs for many months to come. Tax cuts to encourage investment and spending The “mini-budget” has also seen a number of tax rises cancelled that would have affected social enterprises. National Insurance – the national insurance rise of 1.25% has been reversed and the Health and Social Care levy has been cancelled. This will reduce the cost of employing staff, often one of the biggest costs of running a social enterprise. Corporation tax - the cancelling of the planned rise in corporation tax will mean that social enterprises generating distributable profits will be taxed at a lower rate than they otherwise would have been. For social entrepreneurs depending on the dividends of their business for income, this will provide some relief. Annual Investment Allowance – the annual investment allowance (the amount of corporation tax you can write off due to investment in plant or machinery) has been increased to £1m. This will help any social enterprises planning to make significant investments in physical capital over the next few years. Alcohol Duty – frozen for one year from February 2023. This will avoid any tax-related price rises for social enterprises running bars, pubs, restaurants or other venues selling alcohol or social enterprises which host events with alcohol. From a cash flow perspective, most of these measures are unlikely to have much effect (bar the National Insurance Cut). Cuts in corporation tax or increases in the annual allowance are good if you are generating distributable profits, but otherwise unlikely to provide significant help. There will be another Budget later in the year, however, where further tax or spending changes may be made. We will continue to ask for further targeted support to help the cash flow of firms, particularly around employment – which can help ease cash flow and support trading. Reforecasting and replanning Like all businesses, social enterprises will be reforecasting their budgets and developing new plans based on the announcements made and the general economic conditions. If your social enterprise faces financial distress, the most important thing is to speak to your clients, customers and networks as soon as possible. Funders and supporters may be able to help you, or you may be able to negotiate relationships with your clients or customers that reflect the new reality. The worst thing to do is wait.  Social Enterprise UK will continue to run webinars and provide information on ways that can help your social enterprise over the difficult period ahead. Keep an eye on your emails for these events and get in touch if you have any concerns.  A bumpy road ahead At the time of writing there is significant instability in the markets about these announcements and it is very likely that social enterprises are going to face an uncertain eighteen months. Has the Chancellor done enough to avoid recession? Will inflation come down next year? How long with the energy crisis last? These are questions we simply cannot answer. However, social enterprises have shown themselves to be incredibly resilient businesses over the past decade. Austerity, Brexit, COVID and now the energy crisis – it has never been easy running a social enterprise. At Social Enterprise UK we will keep doing what we can to champion our sector, call for targeted support to help the communities we serve and support social enterprises as best we can. Sticking together we will keep working for a fairer society and a greener future.

26 September 2022 A group of 30 large companies have spent over £250 million with social enterprises by bringing them into their supply chains through Social Enterprise UK’s Buy Social Corporate Challenge. Launched in 2016, the Buy Social Corporate Challenge was set up to encourage corporates to use their everyday procurement spend to create positive social and environmental impact. Starting with seven founding partners the programme has grown to include 30 large businesses ranging from pharmaceuticals to finance who have collectively spent £255 million with social enterprises in the last six years with the overall goal being to get to £1 billion spend by 2026. This quarter of a million spend with social enterprises is one of the key findings in the Year 6 Impact Report of the Challenge which is published today (26 September). The report also shows that the money spent by corporates through the programme has helped create 2,700 jobs and has helped social enterprises increase their impact and access new markets. Through trading with Buy Social Corporate Challenge partners social enterprise suppliers have been able to reinvest approximately £26.5 million into the social or environmental missions. One of the 1,030 social enterprises who have supplied Buy Social Corporate Challenge Partners in the last six years is NEMI Teas – a social enterprise set up to help create jobs for refugees. Pranav Chopra, the founder of NEMI Teas had this to say about their work with corporates through the Buy Social Corporate Challenge: “We are currently working with seven partners on the Challenge and are in consultation with two more. Hopefully we’ll be in a third of their partners’ supply chains shortly! It’s because of the Challenge that I’ve been able to directly reach out to other corporates. The Buy Social Corporate Challenge has been remarkable for businesses which have a social enterprise model and the capacity to deliver.” The report argues that not only does buying from social enterprises make a positive social impact, but that it doesn’t have to cost more: 90% of corporate partners in the challenge reported that social enterprises were cost neutral or even cheaper when compared with other suppliers, while 95% said that social enterprises delivered comparable or higher quality. Peter Holbrook, Chief Executive of Social Enterprise UK, said: “Following higher scrutiny by investors, stakeholders, staff and consumers, mainstream UK businesses are increasingly considering their social and environmental impact when they set strategy and make decisions. “SEUK welcomes this shift and we believe social enterprise has an important role to play in supporting the wider business community to embrace social value and consider the social and environmental impact of their work. “There is a group of businesses that are leading the way in leveraging their procurement in service of their purpose. The Buy Social Corporate Challenge (BSCC) partners are demonstrating effectively how their purchasing decisions can help them play their part in achieving a fairer and more sustainable economy. “What this sixth annual BSCC report reveals is that the Challenge is on track to deliver its ambitious £1 billion target, thanks to the commitment and vision of our corporate partners and the ability of social enterprises to deliver high-quality products and services.” The corporate partners on the programme are Amey, AstraZeneca, Barclays, CBRE, Co-op, Compass/Foodbuy, Deloitte, EQUANS, GSK, John Sisk & Son Ltd, Johnson & Johnson, KPMG, Landmarc Support Services, Lendlease, Linklaters, LV=, Mitie, Motorola Solutions, Nationwide, Nestle, NFU Mutual, PwC, Robertson Group, SAP, Siemens, Sodexo, The Crown Estate, Wates Group, Willmott Dixon and Zurich. You can read the full Year 6 Impact Report here