We are coming to the end of this year’s General Election and the finishing post is in sight. Although the Conservatives have a consistent lead in the opinion polls, this doesn’t mean that the race is over. We all know the challenges of opinion polls and with our first winter election in nearly a century, there are plenty of variables. The important thing is for all social enterprises to treat this election with an open mind and prepare for a range of eventualities.
With that in mind, this is the first in a series of blog posts on the election and what it might mean for social enterprises. We are starting with the manifestos of the main political parties.
Who gets social enterprise?
Frustratingly, while all the parties seem to agree that things need to change only the Liberal Democrats have made specific reference to social enterprise in their main manifesto. Labour and Conservatives have both spoken about the need to support community businesses and cooperatives – and this is very welcome – but appear to be missing the whole ecosystem of social enterprise.
The Liberal Democrats have promised to provide a supportive framework to develop social enterprises and they commit to fostering an economy which supports a “diversity” of businesses – including mutuals and social enterprises. It is a light on detail though.
Labour promised to support community businesses and to double the size of the cooperative sector through a new Cooperative Development Agency. Labour have also produced several mini-manifestos and in their Regional Manifesto for the North West they referenced that their new Post Bank would support social enterprises. So maybe there is more room for optimism there. Social enterprise certainly appears to be thriving in the North.
The Conservatives have promised a £150m Community Ownership Fund to help communities take over local pubs, post offices and football clubs. This will help the supply of new social enterprises, but beyond cuts to business rates for small businesses, pubs and music venues, there isn’t much on helping the sustainability of existing social enterprises.
We need the next government to recognise the transformative potential of social enterprises at all levels of our economy. Yes, we need more community ownership. Yes, we need more cooperatives. But we also need to transform the whole of our economy through social purpose and environmental responsibility. Hopefully the next government will recognise this when it comes into office and starts interacting with the sector.
Is austerity over?
This is a theme which we have touched on before, but all the parties have committed to big spending on public services and infrastructure. The main difference is how this investment will be delivered and scale.
Labour have outlined a £250bn National Investment Bank and billions of extra investment for the regions and nations of the UK. They are also promising to reverse cuts to local government and other parts of the public sector. In total they are looking at spending around £90bn extra. The key delivery mechanism appears to be through state controlled agencies. As noted above there is reference to community business, cooperatives and social enterprises in parts of their agenda – but are there partnership opportunities available?
The Conservatives had already announced before the election around £13bn additional spending across health, education and policing. They have topped this up with an extra couple of billion. It is clearly not on the same scale as Labour, but the point seems to be that the Conservatives are not looking to make more cuts – at least a central government level, who knows what will happen to local government without a solution to the social care crisis. Whilst Labour seems to be bent on reversing austerity, the Conservative are more interested in drawing a line under it.
Interestingly, outside of their manifesto, the Conservatives have promised to reform State Aid and procurement rules to support British companies. This will include social enterprises by default but the mechanism that they are likely to use to achieve this is going to our old friend the Social Value Act. Social enterprises have a lot of experience with this legislation so we should make the most of any changes in this area to create more space for the sector to grow.
The Liberal Democrats are committed to £60bn in additional spending, particularly focused on education, childcare and early years funding. This is a break with the other two parties who seem to have concentrated more on health spending.
The key theme for social enterprises in this area is that public sector markets appear to be set for expanding once again after nearly a decade of contraction. A large portion of social enterprises are working with local authorities, the NHS, public bodies and central government. Turning the page on cuts to government will support their growth and development.
Business taxation: Who will win? Who will lose?
Labour have been pretty upfront about their plans to increase taxes on businesses. Corporation Tax will be going up and a number of corporation tax reliefs will be removed as well. This may be offset with replacing business rates with a land levy. With so much change to business taxation to fund extra spending, who knows where the final figures will come out.
The Conservatives are promising to keep taxes at pretty much the same level they are now with some targeted cuts in business rates for small businesses, the high street, pubs and music venues. They are also planning to increase the Employment Allowance which will help social enterprises that employ staff. It is pretty much a steady as she goes.
The Liberal Democrats are also looking to increase corporation tax although they want to replace business rates with a Landowner’s Levy which they say will cut taxes for small businesses. Without more detail, it is hard to see where it will end up.
What are the key battleground issues that will impact social enterprises after the election? What are the differences across climate change, public service delivery and business? How will this impact social enterprise? Read our next blog post for more information…