Last week I spoke in Bristol to an event organised by the Black South West Network and supported by Bristol Social Enterprise Place. The aim of the event was to discuss how we could grow the impact of the social enterprise sector in Bristol. Rather than giving the usual talk about the importance of social investment or social value or public awareness, I gave a different answer.
If we truly want to grow social enterprise in Bristol (and anywhere around the UK) then we need our social entrepreneurs to be political entrepreneurs as well. Growing our sector’s political influence will do more than anything else to turbo charge our impact.
The truth is that although we like to think of the market as a fair space of competition with the state as an impartial arbiter, it never is. Every market is artificial, and the rules of the game are set by politicians and civil servants. These people are in turn influenced by businesses who invest time and money into cultivating relationships with them and persuading them that what their business needs is more support from government (or less interference, if they are making a big profit). These are not “rational” or “evidence based” decisions in many cases.
Why, for example, do we have airlines that pay no tax on the fuel that they use (despite the huge environmental damage flying does) whereas the Green Bus Fund (which helped companies buy green buses and keep local transport links running) has been scrapped. Answer: lobbying. This is just one example, but I am sure that social enterprises can think of hundreds of others.
All this matters because tax, regulation and the law are critical in determining the price of products and therefore the ability of businesses to compete. Take another issue which directly effects many social enterprises, business rates.
If you are a social enterprise (and not a registered charity) you get no business rate relief. You pay exactly the same as another private business.
Taking one of our members randomly, I looked at their potential bill. They aren’t a huge business, but they are paying over £18,000 a year in business rates. This is a lot of money. Imagine if they didn’t have to pay this bill. That could enable them to hire an extra member of staff, increase their marketing budget or lower the cost of their goods.
At the same time as paying this tax bill, social enterprises are paying the Living Wage, working with disadvantaged communities and sourcing their products ethically and environmentally responsibly. We also have to report on our impact in far more detail than our competitors and access to capital can be more expensive than a traditional private business.
All of this increases our costs compared to a traditional business that doesn’t feel the pressure to do this or have the same constraints. As a consequence, they can often undercut social enterprises making our growth more challenging. This is why I often talk about the sector competing with “one arm tied behind its back”. We have to do more than a traditional business (because of our values) but without any recognition from the state of the social value that we create.
Social enterprises have succeeded despite this. The fact that our sector has grown to over 100,000 businesses contributing £60bn to UK GDP is a testament to the ingenuity of our entrepreneurs and the desire of the public for change. But this is only 3% of UK GDP, and if we want to rapidly grow in the next few years (and we need to!) then we have to change the market from one that is unhelpful to social enterprise to a supportive marketplace.
How will this to be achieved?
Some would say just keep doing our good work and assume that people will recognise our value and start to change the system in our favour…(I pause to give readers the chance to laugh).
The truth is that we have to campaign hard and consistently. Matching traditional business lobby groups step for step.
We need to make local and national government understand both the potential of social enterprise and also the consequences of inaction – lower productivity, poor quality jobs and continued inequality. We need to show the public’s support for changing business. We need to advocate practical (but significant) changes that will help social enterprises to compete, particularly around staffing costs and property costs which are fixed. We also need to make sure that traditional businesses are regulated in a way that means that they cannot avoid their environmental and social responsibilities.
Opponents of social enterprise would say that this is rigging the system. To those we should simply say, the system is already rigged. There is no such thing as a “level playing field” in practice, only in textbooks.
To do this, we need the help of social enterprises. We need every social enterprise to be a political animal. We need your voice. We need your case studies and impact data. And yes, we need your money too. SEUK’s efforts to get the Social Value Act through Parliament cost a lot of money, but also generated big returns for our sector. It is a level of market changing reform that we need to see more of. If it wasn’t worthwhile, our competitors would not be spending hundreds of millions on this kind of lobbying every year.
If we want to grow the impact of our sector, investing in our campaigning and political engagement is just as important as investing in our people, our marketing and in expanding our markets. Work with us to make markets work for people and planet.
If you’d like to support SEUK’s political engagement, then please contact Andrew O’Brien on firstname.lastname@example.org