Last week was a busy week for Social Enterprise UK as you may have seen on social media. Our Chair, Lord Victor Adebowale, launched the final report of his Independent Commission on Social Investment which attracted significant interest from social enterprises, social investors and the UK Government.

On the same day, the Social Economy Alliance (a grouping of bodies, including Social Enterprise UK, pushing for economic reform) held a Conference in association with think tank Bright Blue. The theme of the conference was, in anticipation of the Levelling Up White Paper due to be published this week, how the Conservatives could build a ‘One Nation’ economy in the wake of COVID.

You can watch the full Conference back on YouTube.

Minister for Business says BEIS has “massive interest” in social enterprise

The Conference kicked off with a keynote speech from the Minister for Business, Energy and Clean Growth, The Rt. Hon. Greg Hands MP, on how the government saw the green agenda contributing to reducing regional inequality. In the Q&A, the Minister was asked by Rose Marley, Chief Executive of Co-operatives UK, why social enterprises were located in DCMS and not in his department, alongside other businesses. In response, the Minister said that BEIS had “massive interest” in social enterprise, but that sometimes it is better for an issue to be co-owned by a number of government departments.

On the one hand, it is good to see increasing recognition within government about the value of social enterprise. We’ve had increasing engagement with the Department for Business, Energy & Industrial Strategy over the past two years, and to have senior Ministers within the Department publicly express interest in social enterprise is good news.

However, despite this engagement, social enterprises still appear to be held back by the lack of a clear strategy from government about how to support the sector. DCMS, our home department, is supportive of social enterprise, but is hampered by its own lack of resources and influence. BEIS is supportive of social enterprise but does not ‘own’ the policy agenda, so it does not feel able to make decisions on the sector or develop a cross-government strategy.

Statements of “massive interest” are great, but until we get resolution to this problem (either DCMS gets the resources it needs to support social enterprises or BEIS takes control), we appear to be stuck in limbo. Theoretically supported by the Government, but with little to show for it.

Levelling Up: Devolution and Money

The central theme of the Conference was levelling up, but what does that mean? The answer from the Conservatives, and other policy experts, seems to be two things: money and devolution.

The word “investment” is constantly used in reference to levelling up. Foreign Direct Investment. Investment in public services. Investment in skills. Investment in infrastructure. Investment in local government. Central to levelling up is directing more money into areas which are deemed to have been underserved in the past.

Increasingly, however, there is also a consensus that devolution of power is essential. Michael Gove in an article for the Mail on Sunday, written after the Conference, has made clear that the Levelling Up White paper will have proposals around giving more power to local areas and creating more Mayors who can coordinate policy across regions. At the Conference, both Jake Berry MP (Chair of the Northern Research Group) and Cllr Abi Brown (Leader of Stoke-on-Trent City Council) highlighted the need for more power to be placed in the hands of local areas to make their own decisions. Berry’s view was that the Government didn’t even need to have a White Paper, it should just get on with devolution as quickly as possible.

As we have discussed on this blog before, whilst both money and power are important, will it be enough to really deliver levelling up?

Under New Labour, public spending increased by nearly 13% of national income between 1997 and 2010. The average annual increase in investment in public services was 12.7%. Schemes such as the New Deal on Communities saw billions spent on deprived areas. Yet, we seem back to square one. The Institute for Community Studies has found that since 2000, government interventions had contributed to 0% average change in the deprivation of the most deprived places of the UK. Money goes in, money goes out.

On devolution, we have some examples already. In London, for example, we have had an elected Mayor since 2000. Yet, inequality within London has risen since 2000 by over 30%. In Greater Manchester, seven years on from the creation of the Mayoralty, inequality and living standards have not substantially changed according the Independent Inequalities Commission set up by GMCA. Of course, advocates for devolution will always say that not enough power or money has been devolved, but the example of London in particular should be a warning to those that believe that shaking up local government is the fast route to progress.

We need to “level up” business, not just government

Lord Victor summed up the issues well in his welcome speech to the Conference. The vast majority of economic activity takes place in the private sector, not the public sector. The largest 44,000 companies in the UK have a combined turnover three times the level of the UK state. If you want to change local economies, you need to change business.

This is where BEIS should be drawing on its “massive interest” in social enterprises. Social enterprises have a track record in taking the dynamism of business and channelling that into improving people’s lives and communities. Rather than hoping to tempt businesses into doing the right thing, we need businesses that are actively focused on improving society and protecting the planet. This will ensure that any investments we make not only going to those people and areas that need it, but also that the money will keep being recycled in those areas.

As Lord Victor said: “we know that the social economy is opening business to wider pool of people, spreading opportunity into our poorest areas. If that isn’t levelling up, I don’t know what is.”

Let’s see what the Levelling Up White Paper brings, but if it does not include a plan for business reform and supporting social enterprises, it is probably going to fall short.

published 31 January 2021