Posted by: Adam Roake | March 18, 2009

SOCIAL ENTERPRISE IN THE RECESSION?

I went to this Institution of Economic Development discussion last night hosted by Jim Coleman of Regeneris. The panel comprised Matthew Bell, Heather Wilkinson, Tony Rich and Dan Partridge (sorry couldn’t find a personal biog!).

The debate centred around the exciting part that social enterprises could play in regeneration and provision of public services if only central and local government would let it – Matthew went so far as to say that old ways of providing regeneration could never work again, a theme that Bob Kerslake has been pushing since the inception of the HCA, so that social enterprises were the obvious way forward.

The principle theme seemed to be that if only commissioning authorities would properly value social benefit rather than simply assessing the cash cost of provision (the private sector = no social benefit but cheaper, whereas social sector = social benefit but more expensive) then social enterprise could clearly be seen to outperform private sector.

It seems to me that the challenge for the social enterprise sector is threefold. Firstly can they persuade commissioning authorities that they are the most attractive option compared to private sector solutions? This requires the social sector to really major on the high value that should be placed on social benefits arising from retaining surpluses in the community and equally pointing out the potentially high cost to the community of employing private sector contractors who have no long term interest in the community (this includes most of the house builders involved in urban regeneration although not it would seem organisations such as Laing – see Long Term Regeneration or Short Term Puff). This will require greater emphasis on the concept and some simple but effective measurement of Social Return On Investment. It will also require the social sector to lobby the public sector to make sure they ask for social benefit in tender documents – it is an obvious truth that you get what you ask for and PFI, particularly the early examples, provide glaring evidence that inadequate tender documents result in inadequate delivered projects.

Secondly, can they persuade politicians, for whom a principle consideration will always be “will I get elected next time”, to take a longer term perspective and offer proper community leadership? This will always be problematic with regeneration projects, where the politicians represent the existing community and not the community who will move into the regeneration project! It is however absolutely essential a project has support from strong political leadership.

Thirdly can they persuade officers acting for commissioning authorities to trust them? Commissioning authorities at least know who the private sector companies are, although in the current economic climate perhaps more thought should be given to whether those companies will actually survive. A new or newish social enterprise perhaps with restricted financial backing represents an untested risk and of course that is what must be avoided at all costs by the public sector. Neil Homer from LDA gave a good example of this – they are proposing an eco-town community company to run all of the services in the new eco-town but the County Highways officer wants a £10m performance bond in case the company fails – he wouldn’t dream of asking Arriva or Stagecoach for such a bond, because he “trusts” them!

There would seem to be huge possibilities for the social enterprise sector but there is a lot of work to do and it is naive to think that old procurement methods will somehow never reappear because they don’t work in the current climate – everything changes and memories are short.

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