social enterprise action plan scaling new...

Social enterprise action planScaling new heights

With the publication of this actionplan, government support forsocial enterprises enters a newphase – but it is built on deepfoundations.

When, in 2003, I wrote theforeword to the launch documentof the Social Enterprise Coalition,

There's More To Business Than You Think, I said thatthe key to increasing the role of the sector would beensuring its value was better understood.

Now, after years of energetic campaigning by thesector and its umbrella bodies, after championingfrom the Social Enterprise Unit and amid a risingtide of ethical consumerism, social enterprise isbreaking into the public consciousness. Increasingnumbers are learning what the sector has to offer.

In its promotion of a fair society, we are seeingincreasing innovation and confidence. In deprivedareas, we are seeing its ability to increaseemployment and opportunities. In public services,we are seeing its ability to offer innovation.

In the years to come, I believe we will see moresocial enterprises, making greater strides towardssocial justice, working more easily with conventionalbusinesses and the public sector. We will see socialenterprises thrive.

Tony Blair

i

Foreword by the Prime Minister

I have seen myself how socialenterprises can mobilise talentsand resources. Launching adirectory of social enterprises inmy constituency, and talking topeople running them around theUK, it is clear they are centres ofenergy and optimism.

Nationally, they are an important part of ourbusiness future. There are an estimated 55,000 socialenterprises across the country. Their addition to GDPis £8 billion. But their true contribution to business isgreater than all these things: by bringing back intothe economy people who were previously excluded,or by improving the environment or society, they areenhancing prosperity and social justice together.

And it is this ethos that distinguishes them. Theyembody the belief that a Britain of ambition andopportunity cannot afford to turn its back on talent.No individual can be locked out, no potentialsquandered.

Business dynamism and success with fairness andsocial justice: that is the core of our vision for thecountry, and this action plan will help enable socialenterprises to achieve it.

Gordon Brown

ii

Foreword by the Chancellor of the Exchequer

In politics, the most rewardingmoments come when you meetpeople who are at the forefrontof social change, who believethat society can be better, fairerand more just and are makingit happen.

Since I became the minister responsible for socialenterprise in May 2006, I have had the privilege ofseeing the extraordinary commitment and dynamismof the social enterprise movement, from the EdgeSocial Enterprise Award Winners, whom I met inmy first week in office, to the people running theFellrunner community transport service in Cumbria,to well-known entrepreneurs like those responsiblefor Fifteen or The Big Issue.

Uniting all I have met are two things: their valuesand their can-do spirit. They share in common amotivation to change the world using business.And they are united by a determination not to bediverted or defeated, however hard the issues theyare taking on and whatever the obstacles intheir way.

In doing their work, they challenge the private andpublic sectors. They are at the vanguard of changein both. To the private sector, the challenge is to putethical values at the heart of their business and be aresponsible member of the community. To the publicsector, the challenge is to deliver public services in adifferent way, using the skills and expertise of usersand frontline workers.

As I have met social entrepreneurs around Britain,I have tried to listen to their voices in shaping thisplan. I hope it represents a further step in the rightdirection as we seek a genuine partnership betweengovernment and social enterprise.

We in government do not create the inspiration anddynamism of social enterprise. Equally, I know frommy conversations that you need a supportivegovernment, taking its responsibilities seriouslyand putting in place the right conditions for youto thrive.

As we seek to improve these conditions, the Ministerfor the Cabinet Office and Social Exclusion, HilaryArmstrong, and I want to hear from you. Becausewe see this plan as another step in the process of

improving the support for your work, not the end ofthat process.

Just as social enterprise is in the foothills of what itcan achieve for our country, so we are learning allthe time about what government needs to do tohelp you go from strength to strength. So pleaseget in touch with me at [email protected] and let me know what you thinkof the plan and what we in government shouldbe doing.

I am convinced that social enterprise has the powerto change our country profoundly for the better inthe years ahead. We want to help you to make thishappen. In the meantime, I want to thank you forthe privilege of having the chance to work with you.

Ed Miliband

iii

Foreword by the Minister for the Third Sector

Contents

Executive summary 3

1 Why social enterprise matters

Understanding social enterprise 10

The role of government 19

Progress in delivering the Government’s social

enterprise strategy 21

2 An action plan for growth

Fostering a culture of social enterprise 28

Ensuring that the right information and advice are available to those running social enterprises 38

Enabling social enterprises to access appropriate finance 42

Enabling social enterprises to work with government 49

Ensuring delivery 62

Annex 1: Working group membership 65

Annex 2: English regional development agencies anddevolved administrations 66

Contents 1

List of case studies

1 Social Enterprise Coalition

2 Supporters Direct/AFC TelfordUtd Ltd

3 Newlife

4 Community Foster Care

5 The Big Life group

6 Sunderland Home Care Associates

7 ECT Group

8 Enterprising Solutions Awards

9 Proving and Improving

10 Project Cosmic

11 Tom Savage – Blue Ventures

12 Enterprise Insight/Make Your Mark:Change Lives

13 Enterprise Education

14 Fyndoune Community College

15 National Council for GraduateEntrepreneurship

16 Match Winners

17 Green-Works

18 Social Enterprise East Midlands

19 Heather Wilkinson – Striding Out

20 UnLtd

21 The SETsquared Partnership

22 Hackney Community Transport

23 Recycling Unlimited

24 Futurebuilders England/BuildingBlocks Solutions

25 Supply2.gov.uk

26 Rural Community Transport

27 Water City

28 Fuel Poverty

29 Askham Grange Women’s Prison

30 Shoreditch Trust

31 Community Ventures Limited

Social enterprise action plan: Scaling new heights2

Britain’s social enterprise sector is one of the mostsuccessful and vibrant in the world, championed bygovernment and growing in scope and scale. Thereare currently more than 55,000 social enterprises inthe UK, and we want to create the conditions forthousands more to thrive.

Our vision is of dynamic and sustainable socialenterprises, contributing to a stronger economy anda fairer society.

Social enterprises as a force for changeSocial enterprises are helping to change society forthe better. They are businesses with primarily socialor environmental objectives, principally reinvestingsurpluses in the business or community. They arediverse, ranging from small, community-ownedvillage shops to large companies winning multi-million pound contracts. They are generating morethan £27 billion turnover and contributing morethan £8 billion to GDP a year.

How do social enterprises contribute to society?n They tackle some of society’s most entrenched

social and environmental challenges.n They set new standards for ethical markets,

raising the bar for corporate responsibility.

n They improve public services, shaping servicedesign and pioneering new approaches.

n They increase levels of enterprise, attracting new people to business.

The enabling role of governmentGovernment does not create social enterprises. Their leaders’ driving passion and business acumencome from their determination. But government,working with social enterprises and theorganisations that represent them, can create theconditions that enable social enterprises to thrive,and government can tackle the market failures that would otherwise frustrate them.

New research has estimated that at least 55,000businesses with employees identify with theGovernment’s definition of social enterprise. By helping more people to understand socialenterprises, raising awareness among potentialinvestors and customers, ensuring that socialenterprises have access to business support andfinance and are included in public service delivery,we aim to help create the conditions to enable them to succeed.

Specifically, we will do the following:

1 Foster a culture of social enterpriseBuilding the evidence and raising awareness of the impact of social enterprise and promotion ofsuccessful role models will attract new entrants,customers, financiers and support providers.

To make this happen:

a. The Cabinet Office (Office of the Third Sector)will use the developing evidence base to raiseawareness and understanding of social enterpriseamong a range of audiences, working inpartnership with the Social Enterprise Coalitionand others in the sector.

b. The Office of the Third Sector will develop aprogramme to appoint 20 social enterpriseambassadors to raise awareness of socialenterprise, working with the social enterprisesector.

c. The Office of the Third Sector and theDepartment of Trade and Industry (DTI) willsupport a campaign to promote social enterpriseto young people, Make Your Mark: Change Lives,delivered by Enterprise Insight working with thesocial enterprise sector.

Executive summary 3

Executive summary

d. The Department for Education and Skills (DfES),supported by the Office of the Third Sector, willensure that strengthened guidance material onsocial enterprise is provided to schools, and thatgood examples of how schools have used socialenterprise are widely promoted.

e. The Government believes that social enterprisebusiness models should have a higher profilewithin GCSE, A level and other business studiescourses. The Office of the Third Sector and DfESwill work with the Qualifications and CurriculumAuthority on how best to achieve the fullintegration of social enterprise business modelsinto the GCSE business studies syllabus, andthereafter into A level and other business studiescourses.

f. DfES will explore new ways to provide andpromote social enterprise learning within thetertiary education framework. The Office of theThird Sector will support DfES and the NationalCouncil for Graduate Entrepreneurship topromote social enterprise as a potential career tostudents in higher education.

g. The Office of the Third Sector and the DTI’s SmallBusiness Service will develop a new research

programme to build further the evidence on theeconomic, social and environmental value of thesector, and the Office of the Third Sector willcommission a review of research on socialenterprises and ethical consumer markets andhow they can affect social enterprises.

h. To encourage links between social enterprise andthe conventional private sector, the Office of theThird Sector will spread the messages fromMatchwinners about delivering real businessbenefits from collaboration to a wider audience.This will include facilitating discussions withbusiness leaders about the drivers for commercialactivity with social enterprise.

2 Ensure that the right information andadvice are available to those runningsocial enterprises Many of the challenges that face social enterprisesare the same as those facing the wider businesscommunity, but those facing social enterprises can bemore complex because social enterprises deliver botha financial and a social or environmental bottom line.

They therefore need access to appropriate support tomaximise their business performance and, in turn,their social impact. The challenge is to ensure thatsocial enterprises are able to access the support thatthey need, in the market or through governmentprogrammes, linking specialist expertise withmainstream support channels.


a. The Office of the Third Sector will provideadditional funding from April 2007 to RegionalDevelopment Agencies (RDAs) to improveBusiness Link’s capacity to broker businesssupport for social enterprises, consistent with thecross-government business support simplificationprogramme. From an initial pilot level of at least£0.5 million in 2007/08, the funding will rise to£1.8 million per year thereafter. The RDAs willwork with stakeholders, including specialistsupport agencies, to use the money to meet thesupport needs of social enterprises in theirregion.


b. The DTI will improve the social enterpriseinformation and guidance onwww.businesslink.gov.uk/socialenterprise,making it a successful single source ofinformation for social enterprises.

c. Capacitybuilders will fully integrate support forsocial enterprise infrastructure into its newstrategic plan for delivering ChangeUp’sobjectives, and report on its impact on socialenterprises in its annual evaluation.

d. The Office of the Third Sector will work withpartners to identify national, regional, sub-regional,local and sectoral social enterprise networks. Stepswill then be taken to address any gaps in provision.

e. The Office of the Third Sector, supported by theDTI and DfES, will commission a review tounderstand the specific skills needs of socialenterprises and whether they are met bymainstream business education and trainingnetworks and organisations.

3 Enable social enterprises to accessappropriate finance Social enterprises need access to appropriate financeat different stages in their life cycle. Governmentneeds to tackle barriers that might prevent investorsfrom investing in social enterprises, or socialenterprises from seeking appropriate finance.


a. The Office of the Third Sector will make availableup to £10 million for investment in socialenterprises, subject to consultation with thesocial enterprise and finance sectors on how bestto use these resources.

b. The Office of the Third Sector and the DTI’s SmallBusiness Service will roll out further financialawareness training for social enterprises, workingwith the regional development agencies and thesocial enterprise sector.

c. The DTI’s Small Business Service will include socialenterprise within mainstream ‘access to finance’interventions, such as making the next edition ofthe No Nonsense Guide to business finance moreinclusive of social enterprise.

d. HM Treasury and the Office of the Third Sectorwill jointly conduct a review, with the Small

Business Service and HM Revenue and Customs,of how the operation of the CommunityInvestment Tax Relief and other incentives mightbe improved to the benefit of social enterprise,reporting progress in Budget 2007.

4 Enable social enterprises to work with governmentSocial enterprises operate across all sectors of theeconomy. Many operate in markets where the publicsector is the main commissioner of services, such ashealth and social care, community transport or wastemanagement. For them, it is important thatgovernment is an effective partner, with thosecommissioning public services aware of socialenterprises as potential suppliers, and that blockagesto best practice delivery are tackled effectively. Forothers, operating in commercial or consumermarkets, but nevertheless generating substantialpublic benefits through the people they employ orthe services they offer, it is important that policymakers are aware of the role that they can play.


a. The Government will implement a cross-departmental third sector public services actionplan, to be published by the Office of the ThirdSector later in the year.

Executive summary 5

b. The Office of the Third Sector in collaborationwith North East Regional Centre of Excellencewill tackle barriers to the use of social clauses, for example through the development of a smallnumber of template social clauses for key socialoutcomes as tools to enable and focus their use.The Office of the Third Sector will also work withthose commissioners pioneering the use of socialclauses to learn about their experiences and thecosts of social clauses, and to draw togetherleading practice.

c. Departments are working to overcome barriers tosocial enterprises delivering public services. Forexample, the Department for Environment, Foodand Rural Affairs (Defra) will publish a revisedwaste strategy for England before the end of2006, which will set out policy on socialenterprise and steps being taken to help it play agreater role in sustainable waste management.The Department of Health is supporting entry ofsocial enterprises into the health and social careservices market in response to commissionerrequirements.

d. The Olympic Board is committed to ensuring thata diverse range of partners, including socialenterprises, contribute to the delivery of theLondon 2012 Olympic Games, for example by aprocurement policy which will seek to ensureopen competition for contracts. The Office of theThird Sector has commissioned research tounderstand opportunities for social enterprise inthe Olympics and the London DevelopmentAgency (LDA) is supporting a start-upprogramme, including social enterprise, toengage the workless in employment throughenterprise.

e. The Department for Communities and LocalGovernment (DCLG) will work with the Office ofthe Third Sector, Defra and the DTI to promoteways in which mainstream regeneration fundingcan be used to develop sustainable socialenterprise solutions, using case studies ofsuccessful practice.

f. The Department for Communities and LocalGovernment will publicise and promote ‘clawback’guidance to local authorities, detailing the extentto which a funding body should retain an interestin a transferred asset.

g. From April 2007, the Office of the Third Sectorwill extend its strategic partners programme toprovide £0.8 million a year for three years tosupport organisations representing socialenterprises at a national level, to enable thesector to raise its own profile and influencepublic policy.

Measuring successThe following will be measures of our success: n if the numbers of social enterprises increase, as

measured by the Annual Small Business Survey;n if more people are aware of social enterprise,

as measured by the Small Business ServiceHousehold Survey; and

n if social enterprises report fewer barriers to growth.


An ongoing processThis plan is the next chapter in the Government’scontinuing support for social enterprises. Since thepublication of its strategy in 2002, the Governmenthas created a new legal form, the communityinterest company; improved business support andadvice and the availability of finance; and supportedthe establishment of the Social Enterprise Coalitionto provide a unified voice for the sector to workwith government in raising the profile of socialenterprise.

The plan sets out the role of government insupporting social enterprises, and outlines actionsthat the Government will take in the next phase ofits support.

The actions in this document are not the end of theprocess. As we learn more about social enterprise,some actions may need to be added, othersmodified. The Government and the sector need toacknowledge where gaps in our knowledge remainand how the evidence can be developed.

HM Treasury and the Office of the Third Sector arecurrently engaged in a review of the third sector insocial and economic regeneration, to feed into theComprehensive Spending Review 2007. This review is

being informed by the largest consultation theGovernment has ever conducted with the thirdsector, and this action plan forms an early responseto some of the issues raised during the consultation.The Government intends to set out further details ofthe consultation and next steps around the time ofthe Pre-Budget Report.

Implementing the action plan will be a collaborativeprocess, and feedback is welcome.

n You can email us at: [email protected]

n You can write to us at:Social Enterprise UnitOffice of the Third SectorCabinet Office35 Great Smith StreetLondon SW1P 3BQ

n Or visit our website at: www.cabinetoffice.gov.uk/thirdsector

People running or looking to start up a socialenterprise can find help at www.businesslink.gov.uk/socialenterprise which provides advice to allbusinesses and links to further sources of advice,including websites and materials developed by thesector.

Information on social enterprise in the UK can befound on the Social Enterprise Coalition website –www.socialenterprise.org.uk. A campaign topromote social enterprise to young people is alsoprofiled at www.starttalkingideas.org

Executive summary 7

Why social enterprise matters

1

1 The Government believes social enterprise has a keyrole to play in achieving many of its goals, includingovercoming social injustice and exclusion. At theheart of social enterprise is a strong commitment to achieving a better society. The social enterprisesector is diverse, including development trusts,community enterprises, housing associations,football supporters’ trusts, social firms, leisure trustsand co-operatives. Social enterprises therefore use awide variety of legal forms; some incorporate ascompanies while others take the form of industrialand provident societies. The national umbrella bodyfor social enterprises in the UK is the SocialEnterprise Coalition (case study 1).

2 Social enterprises range from small, community-owned village shops, to large development trustssuch as Coin Street Community Builders on London’sSouth Bank. But large or small, they prove that it ispossible to combine social responsibility withfinancial success. They set an ethical standard in theprivate sector, and challenge the public sectorthrough their innovation in service delivery. Whatsocial enterprises all have in common is acommitment to delivering both financial and socialor environmental objectives.

Definition 1: What is a social enterprise?

A social enterprise is a business with primarily socialobjectives whose surpluses are principally reinvestedfor that purpose in the business or in the community,rather than being driven by the need to maximiseprofit for shareholders and owners.

3 Social enterprises are part of the ‘third sector’,which encompasses all organisations which are non-governmental, principally reinvest surpluses in thecommunity or organisation and seek to deliversocial or environmental benefits. The third sectorembraces voluntary and community organisations,charities, social enterprises, mutuals andco-operatives.1

4 The roots of social enterprise reach back to theco-operative movement and the Rochdale Pioneersof 1844, who established one of the earliestco-operative enterprises. Similarly, many charitieshave, historically, sought to increase their income bytrading, either with retail consumers or by deliveringcontracts for government. However, the firstgovernment document to acknowledge socialenterprises as a group of organisations concernedwith delivering social or environmental objectivesthrough trading was Enterprise and Social

Exclusion,2 published in 1999. This report coveredthe role, and potential contribution, of socialenterprises in the regeneration of deprived areas.

Case study 1The Social Enterprise Coalition (SEC) is the nationalbody for social enterprise in the UK. Its membernetworks span the social enterprise movement, andbring together over 10,000 businesses that trade fora social purpose, providing them with a collectivevoice. Established by the social enterprisemovement in 2002, with backing from the DTI, SEChas developed into an effective champion for socialenterprise. It is a valued partner and adviser toGovernment, raising the profile of social enterpriseand building capacity and encouragingco-operation across this new and growing sector.www.socialenterprise.org.uk


Understanding social enterprise

1 Definition based on HM Treasury, DTI, Home Office(February 2005) Exploring the Role of the Third Sector inPublic Service Reform.

2 National Strategy for Neighbourhood Renewal: PolicyAction Team 3 (1999) Enterprise and Social Exclusion. London: HM Treasury.

5 More is now known about social enterprises thanever before. In early 2006 the Government extendeda mainstream business survey to include socialenterprises. This provided new information aboutthe full extent of social enterprise across the wholeeconomy.3 It estimated that at least 55,000businesses with employees fitted the Government’sdefinition of social enterprise.4 This representedabout 5 per cent of all businesses with employees,with a combined turnover of about £27 billion, or1.3 per cent of the total turnover for all businesseswith employees. Their contribution to GDP wasestimated to be £8.4 billion.

1: Why social enterprise matters 11

3 For further information see www.cabinetoffice.gov.uk/thirdsector

4 Estimate derived from the data from Small BusinessService (2006a) 2005 Annual Small Business Survey.London: Department of Trade and Industry, combinedwith large company data from IFF Research (2005)A Survey of Social Enterprise across the UK. London: SmallBusiness Service.

Definition 2: What is a co-operative?

Some of the oldest and largest social enterprises areco-operatives – and so are some of the most modern.

July 2006 saw the establishment of the firstco-operative community interest company, MobileAdvice Co-operative in Darlington, providing free drop-in advice on housing, benefits, debt,domestic abuse and other issues. And there arearound 8,000 industrial and provident societies, either co-operatives or community benefit societies,and many more formed as companies limited byshares or guarantee.

Unifying them are the ‘co-operative values andprinciples’ covering self-help, responsibility, democracy,equality, equity and solidarity. A co-operative isdefined as an autonomous association of personsunited voluntarily to meet their common economic,social and/or cultural needs and aspirations througha jointly owned and democratically controlledenterprise. It is estimated that there are 800 millionmembers of co-operatives around the world.

Co-operatives today are thriving in agriculture andmanufacturing as well as providing diverse services,from retail to housing, health and social care toeducation, finance to graphic design.

Co-operativesUK, the central membership organisationfor co-operatives in the UK, is a member of theSocial Enterprise Coalition.

The co-operative and credit union sectors areoperating using legislation that dates back manyyears.

HM Treasury, in partnership with representatives ofthe co-operative sector and other stakeholders, is toundertake a review of co-operatives legislation – theIndustrial and Provident Societies Acts and theCredit Unions Act. The Government will identify thestrengths and weaknesseses of the currentframework and produce recommendations forimprovement and reform.www.cooperatives-uk.coop

Case study 2Supporters Direct (SD) has secured a £1.8 millionfunding deal over three years from the Football StadiaImprovement Fund, starting in 2007/08. The fundingdeal will enable SD and many trusts to work inpartnership to develop a fundamental change inapproach to the running of some football clubs, bydelivering a new community ownership structureenabling them to relocate and to deliver core localservices from stadiums. www.supporters-direct.org

AFC Telford Utd Ltd was formed by the club’s supporters, who promised themselves and the community thatthey would keep football alive in Telford. ‘The club is like a co-operative, 100 per cent owned by thecommunity’, says Mark Donavon, Telford and Wrekin Council regeneration manager, explaining that the councilhas been active in forming a partnership with the club and helping to develop the stadium. Along with partnersin private companies and voluntary and community groups, the club has been developing a range of newfacilities and services for the community, including an ICT room, a vulnerable children project and a learningcentre which will be the ‘hub’ of a project that aims to help thousands of schoolchildren each year use adynamic sporting environment to develop numeracy, literacy and computer skills. www.telfordutd.co.uk,www.tust.org

6 A previous survey, published in July 2005,provided more detailed analysis of part of thesocial enterprise sector. Focusing on companieslimited by guarantee and industrial andprovident societies, it found that most weresmall organisations: 23 per cent had an annualturnover of less than £100,000, and the medianwas £285,000, although almost one in five had aturnover of more than £1 million a year.5

7 This survey also confirmed that social enterpriseswere involved in a wide range of economicactivity, in sectors such as training, social care,housing, leisure and childcare.

8 The diversity of social enterprises is reflected intheir different histories. More evidence is neededon how different models perform in differentcircumstances,6 but the ways in which socialenterprises start up can include the following:7

new start-ups, led by individuals or communities;


5 IFF Research (2005) A Survey of Social Enterprise across theUK. London: Small Business Service. The survey focused ontwo legal forms used by social enterprises – companieslimited by guarantee, and industrial and providentsocieties. Although this meant that it underestimated theoverall population, it provides important detail on themake-up of social enterprise.

6 Issues such as these relating to the evidence on the thirdsector are being examined in more depth in the HMTreasury/Cabinet Office review of the third sector ineconomic and social regeneration.

7 List adapted from Bates, Wells & Braithwaite and SocialEnterprise London (2003) Keeping it Legal: Legal Formsfor Social Enterprises. London: Social Enterprise London.

transformation of an existing voluntary orcommunity organisation; spin-offs from voluntary orcommunity organisations; employee or communitybuy-outs of private sector businesses which thenadopt social aims (case study 2); and spin-offs frompublic sector bodies. 2

The impact of social enterprise9 The Government recognises that social enterprises

contribute to its vision of a fairer, more just society –and, so, to a number of its key targets.8

Contributions come through:n meeting social needs, using business success to

address social or environmental challenges suchas regeneration and social inclusion;

n encouraging ethical markets, raising the bar for corporate responsibility;


8 These include Objective I of the Department forCommunities and Local Government (tacklingdisadvantage by reviving the most deprivedneighbourhoods, reducing social exclusion and supportingsociety’s most vulnerable groups); Objectives I, II and IV ofthe Department for Work and Pensions (on child poverty,employment, and disabled people, respectively); and theDepartment of Trade and Industry’s Public ServiceAgreement 6 (on building an enterprise society); as wellas contributing to specific public services.

Encouraging ethicalmarkets

n Responding to new marketsdriven by increasing ethicalconsumerism

n Raising the bar by adoptingpioneering ethical practices,such as fair trade

Improving public services

n Shaping service design,pioneering new approachesand winning contracts todeliver services

Increasing enterprise

n Attracting newentrepreneurs who want tomake a difference tosociety or the environment

n Encouraging more women,under-represented groupsand young people to starttheir own businesses

Dynamic andsustainable social

enterprises,contributing to a

strongereconomy and afairer society

Figure 1: The contribution of social enterprise

Meeting social need

n Using business success to meet social orenvironmental ends

n Providing opportunity andskills for marginalisedgroups – and in some casesa potential route offbenefits

n improving public services, by shaping servicedesign, pioneering new approaches anddelivering services; and

n improving levels of enterprise, showing thatethical commitment and business success can be combined.

Social enterprises help meet social and environmental needs

10 Social entrepreneurs are driven by their desire tochange society for the better. Social enterprisesuse the strength of a sustainable business to meetsocial need and regenerate deprived communities.

‘We started 15 years ago to getpeople with the problembecoming a part of the solution.We gave people the chance ofmaking their own money. Wecontinue to create independentlives for the victims by getting

them out of their victimhood.’ John Bird, Founderand Editor-in-Chief, The Big Issue


Case study 3

Newlife is a Leicester-based construction companyproviding employment and training to the long-term unemployed and school leavers who have notgone into further education. The Small BusinessService has undertaken a cost/benefit analysis of aNewlife project renovating 204 houses in NorthBraunstone.

The Small Business Service estimates that theExchequer could save around £3,500 per person per year in Jobseeker’s Allowance payments and

Housing/Council TaxBenefits when thistarget group ishelped into work.

For this project this represents a total saving to theExchequer of approximately £77,000 a year.

As a result of training and employment byNewlife, the lifetime earnings potential of eachworker will increase. The benefit for each workeris estimated to be about £20,000 on anannualised basis. The aggregated benefit ofincreased lifetime earnings potential is estimatedat around £450,000 annualised.

The Small Business Service estimates that the totalnet benefit of the Newlife project, taking accountof the reduction in Jobseeker’s Allowancepayments, the increase in lifetime earnings andother benefits (explained further atwww.cabinetoffice.gov.uk/thirdsector), is around£610,000 a year. www.newlife-build.co.uk

11 This was confirmed by the 2005 survey of social

enterprises, in which 17 per cent reported that

their primary aim was to help the environment; 34

per cent aimed to help both the environment and

people, by providing employment, goods or

services; and 49 per cent aimed to help people

alone.9 One quarter specifically helped people

through providing or brokering employment

opportunities, often for socially excluded groups (8

per cent of social enterprises). Case study 3 gives an

example of a social enterprise, Newlife, that

provides jobs and training to the long-term

unemployed, resulting in considerable savings to

the Exchequer.

12 Social enterprises can also contribute to

neighbourhood regeneration. Over half of the

social enterprises in the 2005 survey were in the

40 per cent most deprived areas.

Social enterprises encourage ethical markets

13 There is emerging evidence of a shift in publicattitude, with consumers and employees increasinglyexpecting that companies show a high degree ofsocial and environmental responsibility in theiroperations. Between 2003 and 2004, ‘ethicalconsumption’ (where choice has been informed bya particular ethical issue, such as human rights orthe environment) grew by 15 per cent, to stand at£25.8 billion.10 Between 1999 and 2004, thepercentage of the population that said they chose aproduct or service on the basis of a company’sresponsible reputation increased from 51 per centto 62 per cent.11

14 Social enterprises have been in the vanguard of new markets to meet the increase in ethicalconsumerism, and they are well placed to respondto future growth. The principles of fair trade incoffee, returning profits to farmers in developingcountries, were pioneered by CaféDirect from 1991,and have now been adopted by some mainstreamproviders. Between 1999 and 2004, the sale ofFairtrade-marked food grew by more than 640 percent.12 Research with businesses in the North Westfound that corporate responsibility can be bestimproved by demonstrating what is possible –‘organisations are most inspired and encouraged by learning from each other’.13


10 The Co-operative Bank, New Economics Foundation andThe Future Foundation (2005) The Ethical ConsumerismReport 2005. London: The Co-operative Bank.

11 Ibid.

12 Ibid.13 Sustainability Northwest (2005) Responsibility Northwest:

Businesses Working Together for a Better Northwest.Manchester: Sustainability Northwest.9 IFF Research (2005) op. cit.


Social enterprises improve public services

15 Many of the markets in which social enterprisesoperate are ones in which the public sector is amajor customer. Research by the Small BusinessService on procurement from small businesseshighlights how social enterprises are winningcontracts and delivering successfully (casestudy 4).14

16 At their best, social enterprises can offer a highlevel of engagement with users and a capacity tobuild their trust.15 They are also a valuable sourceof innovation – including for services they do notdelivery directly. Public services learn from theproblem-solving spirit of social enterprises, whichcan help improve the quality of public services byshaping service design and by pioneering newapproaches that can influence the way services aredelivered by the public sector.

Case study 4

Community Foster Care (CFC) is a social enterprisehelping to diversify the market in social care –where there is an estimated shortfall of over10,000 foster carers across the UK. CFC is anindependent agency that fills a gap in the marketfor foster carers, providing foster carers for‘looked after children’ placed by local authorities.CFC has provided employment for many localpeople, particularly in the socially andeconomically deprived areas of Gloucestershire. Itrecruits foster carers and provides them withongoing training and support to ensure they meetthe high standards required by the NationalMinimum Standards for Fostering Services, theFostering Services Regulations 2002 and the CareStandards Act 2000. CFC takes the financial risk, associal services only approach independentagencies when their own in-house carers cannottake a child, and only pay while a child is inplacement. CFC is considering replicating itsbusiness model. www.communityfostercare.co.uk

Case study 5The Big Life group,formed in 2002, is acollection of socialbusinesses and charitiesworking together toprovide support andopportunities to helppeople to change theirlives. The group employsabout 220 people andturnover in 2003/04 was

£8.3 million, with less than 5 per cent coming fromgrants. Income streams are primarily from activitiessuch as contract delivery of primary healthcareservices, Jobcentre Plus services, advertising andmagazine sales revenue from The Big Issue in theNorth, and fees charged to parents for theprovision of childcare services. Its childcare servicealso extends to providing accredited training tolocal people who wish to work in this area. Thegroup also sees opportunities for expansion intoprimary healthcare and children’s centres.www.thebiglifegroup.com

14 Small Business Service (2005) A Study of the Benefits ofPublic Sector Procurement from Small Businesses. London:Small Business Service.

15 HM Treasury (2005) Exploring the Role of the Third Sectorin Public Service Delivery and Reform. London: HM Treasury.

Social enterprises increase overall levels of enterprise

17 Enterprise is the lifeblood of the UK economy,creating prosperity and jobs. Encouraging enterprisecontributes to economic success, improvingproductivity and competitiveness and contributingto efficiency and innovation. Although levels ofenterprise are ahead of the other major EuropeanUnion (EU) economies and Japan, the UK mustattract new people into business if it is to close theproductivity gap with countries such as the USAand Canada.

18 Social enterprises can make a valuable contributionto the level of business start-up. Those who may notbe attracted by conventional business may be moreinterested in starting a social enterprise, and socialenterprise may be an attractive way to fulfil theaspirations of young people for social change.

‘I think social enterprise is an extremely exciting

area. I wouldn’t want to be doing anything else.

It’s stimulating, dynamic and I’m learning about

every single aspect of the business from charity law

to marketing and sales. But at the end of the day

you don’t have to be just driven by the bottom

line. You have an extra drive and passion for what

you’re doing, because you’re changing things in a

very real way.’

Amy Carter, 26, co-founder, Bespoke Experience

and Young Social Entrepreneur of the Year, Edge

Upstarts Awards 2006


16 Harding, R, Brooksbank, D, Hart, M, Jones-Evans, D, Levie,J, O’Reilly, M, Walker, J (2004) Global EntrepreneurshipMonitor: Focus on Social Entrepreneurs. London: LondonBusiness School. See also Harding, R and Cowling, M(2004) Social Entrepreneurship Monitor. London: LondonBusiness School.

19 Findings from Global Entrepreneurship Monitorhighlighted that women and certain ethnic minoritygroups were more likely to choose to be socialentrepreneurs than conventional entrepreneurs(case study 6).16 In some regions, women are morelikely than men to start up and run a socialenterprise, in contrast to being less than half aslikely to start up and run a conventional business.


Case study 6Sunderland Home Care Associates (SHCA), overall winner of the Enterprising Solution Awards2006, is a social enterprise set up in 1994 to take advantage of opportunities from thederegulation of the delivery of local authority domiciliary care. Started with just 20employees, mostly female, SHCA now employs over 175 people (85 per cent of whom arewomen), and has an annual turnover of £1.75 million.

SHCA is a major provider of personal care and domestic services on behalf of Sunderland CityCouncil. Its particular focus is on enabling older and disabled people to stay in their homes

for longer by offering them specially tailored care services. Its flexible working policies allow employees tobalance work and family life, resulting in an exceptionally low staff turnover of 3.5 per cent annually.

Accepting the award, Margaret Elliot, SHCA’s founder, said: ‘I haveworked in this field for over 30 years and have worked hard at whatI truly believe in. I see, on a daily basis, how this way of workingliterally changes people’s lives. A wise and humane man once said:“What we think or what we believe is, in the end, of littleconsequence. The only thing of consequence is what we do.”’

SHCA’s success has led to the setting-up of Care and Share Associatesto replicate the business model, which has so far been copied inNorth Tyneside, Newcastle and Manchester. www.casaltd.com

20 Social enterprises are businesses motivated by thepursuit of social and envionmental objectives, whichthey must be commercially successful to achieve. Therole of government is not to create social enterprises,but to create an environment that allows them tosucceed.

21 The principal way in which government can achievethis is by identifying and helping to overcome marketfailures. In many cases, this involves overcoming theinformation deficit that exists: financiers andcustomers can be insufficiently aware of socialenterprise to make an informed choice. Althoughindividual social enterprises may have been inbusiness for many years, the term ‘social enterprise’and the concept of achieving social or environmentalobjectives through trading are still not widelyunderstood. This can prevent possible entrepreneursfrom realising their potential or their social goals. Itcan also prevent investors, customers and advisersfrom working effectively with social enterprises.

22 There are four areas where the role of governmentis most important, and which are the focus of thisdocument:n Government can foster a culture where there is

full information about the potential of socialenterprise. It can build the evidence base,promote role models, and work with others todisseminate the knowledge of the impact ofsocial enterprise and to inspire new entrants tothe sector. This will help to raise the profile ofsocial enterprise among possible founders,customers, financiers and advisers.

n Government can ensure that the rightinformation and advice are available to those running social enterprises. There isevidence to show that business support improvesbusiness performance, but businesses may not beaware of the value it can bring and have difficultyfinding the right advice. The Government isconcerned with making sure that the businesssupport landscape is well signposted, and thatbusinesses including social enterprises are awareof where to go for the best advice. Our approachis to make sure that business supportinterventions are accessible and appropriate tosocial enterprises, and, where there is a clear needfor specialist support tailored to social enterprises,

this should be linked as much as possible intomainstream services. The Government issimplifying its business support environment byreducing the number of business products andservices from about 3,000 today to no more than100 by 2010. This will ensure that all publiclyfunded business support provides value formoney and better access for all businesses.

n Government can enable social enterprises toaccess appropriate finance. Many forms offinance and funding are available in the market,ranging from charitable grants to loan finance.Government’s role is to address any failures thatexist in that market, to ensure that viable socialenterprises are able to access the finance theyneed. There appear to be specific barriers tofinancing social enterprises, including a higherperception among social enterprises that theymight be rejected by lenders, and the difficultyof raising equity capital in organisations that donot have a share structure. Government has arole in working with the finance and socialenterprise sectors to find solutions.


The role of government

n Government can ensure that social enterprises areable to do business with the public sector and towork with government to achieve shared objectives.Social enterprises operate across all sectors of theeconomy, serving individuals in the private, publicand third sectors. For those social enterprisesoperating in markets where the public sector is themain customer, it is important that government is aneffective partner. Structural barriers that preventsocial enterprises being able to compete fairly forgovernment contracts must be removed, and publicpolicy makers must be aware of the role that socialenterprise can play in delivering governmentobjectives.


23 Government, working in close partnership withthe social enterprise sector, has already achieved agreat deal in its support for social enterprise. Thefirst government strategy for social enterprise,launched in 2002, proposed ways to create anenabling environment, make social enterprisesbetter businesses, and establish their value.17

24 An independent review has examined the impactof the Government’s social enterprise strategy sofar.18 They concluded that valuable progress hasbeen made since the strategy was launched(table 1).

25 Overall, the review reported strong support forbuilding on the social enterprise strategy. Itconcluded that the Government’s strategy hadgalvanised interest and action among a range ofstakeholders, and that the underpinning analysis –and its aim to help the sector grow – remainedvalid.

Table 1: Progress made since the launch of the social enterprise strategyin 2002


Progress in delivering the Government’ssocial enterprise strategy

Issue Independent review findings

Size of the sector Respondents reported growth of the sector.

Awareness of social Increasing awareness of enterprise social enterprise, including

high-profile examples ofsuccessful social enterprises.

Business improvement Availability of appropriate and development support has increased, and

new and better tools have beendeveloped to support the sector.

Improving profile and Significant improvement, credibility of social particularly in social enterprises enterprises’ profile among

policy makers.

Underpinning evidence The volume and quality of dataand information on the sectorhave increased – in particularthrough the Department ofTrade and Industry’s Survey ofSocial Enterprise in the UK.

17 DTI (2002) Social Enterprise: A Strategy for Success18 GHK (2005) Review of the Social Enterprise Strategy:

Summary of Findings. London: Small Business Service.

Definition 3: What is a community interestcompany?

Community interest companies have a flexiblecompany structure with a strong identity. Theyinclude a compulsory asset lock, and have theability to raise share and loan capital. They can bea private company limited by shares or guarantee,or a public company. To apply, the applicant mustmake a community interest statement identifyingwho the company intends to benefit and in whatway. The asset lock means the company’s assets(including surplus profits) must be used for thebenefit of the community it was set up to serve, orif transferred to a third party for another purposethen full market value must be attained. An annualreport provides for transparency of operation,informing the Regulator of Community InterestCompanies and the general public of what hasbeen achieved by the money generated throughthe year. www.cicregulator.gov.uk


The ECT Group, the UK’s largest community interest company,provides a range of high-quality, cost-effective public services.These include recycling and sustainable waste management,street cleaning, healthcare, public and community transport,community railways, and vehicle and railway engineering.With nearly £50 million of turnover and over 1,100 staff, it isone of the UK’s leading social enterprises and the UK’s largestcommunity recycling organisation.

The ECT Group has a clear purpose: to provide outstanding,socially responsible, environmentally aware, and financiallysustainable public services to local communities.

ECT’s Chief Executive, Stephen Sears, believes that being acommunity interest company drives home the reality thatECT is a profitable enterprise, and hopes that thecommunity interest company brand will help people identifyECT’s social enterprise ethos and its approach to publicservice delivery. www.ectgroup.co.uk

Case study 726 Some of the most important actions taken by theGovernment to help social enterprise include:n creating a new legal form, the community

interest company, to provide a clear, lightlyregulated structure for social enterprises. Itenables new or existing organisations to clearlysignal their social or environmental credentials.Over 500 organisations have now registered ascommunity interest companies. Definition 3 hasmore details and case study 7 gives an exampleof one of the early adopters of the new form;

n increasing the amount of finance available tosocial enterprises, by supporting theestablishment of the £125 million Futurebuildersfund, managed by Futurebuilders England, and,through the Small Business Service’s PhoenixFund, a range of community developmentfinance institutions;

n helping to raise the profile of social enterprise,funding the establishment of the SocialEnterprise Coalition, and, together withEnterprise Insight and the Social EnterpriseCoalition, organising Social Enterprise Day;

n along with other key sponsors, developingEnterprising Solutions into prestigious nationalannual awards, delivered since 2004 by the SocialEnterprise Coalition (case study 8);

n working with regional development agencies tosupport regional networks of social enterprises,and to improve the knowledge and expertise ofbusiness support providers;

n encouraging collaborations between socialenterprises and conventional companies, with the publication of Match Winners, which profilessuccessful commercial relationships; and

n supporting social enterprises through local andregional government. The new Local EnterpriseGrowth Initiative has seen social enterpriseincluded in all successful first-round bids, andsocial enterprise has received more emphasis ineach of the English RDAs’ new corporate plans(published in summer 2005). Similarly, thedevolved administrations and the NorthernIreland Administration now all have their ownstrategies to support social enterprise. Seeannex 2 for more information.

27 The past few years have seen great steps forward bythe social enterprise movement in working togetherand with government to support the growth ofsocial enterprise. Specialist national umbrella bodiessuch as co-operativesUK, the Development TrustsAssociation, Social Firms UK, SpoRTA and theCommunity Action Network have made progress insupporting the development of different types ofsocial enterprise, working on issues such as businessstart-up, legal structures, quality and impactmeasurement and access to finance; and haveencouraged learning and joint working across thesector. In addition, strategic social enterprise bodieshave been established in many of the Englishregions, along with the Scottish Social EnterpriseCoalition and networks in Wales and NorthernIreland, and these have been working with theRDAs, Government Offices, local authorities and thedevolved administrations to bring a much morejoined-up approach to support for social enterpriseson the ground. At a national level social enterprisesand their specialist networks are working togetherthrough the Social Enterprise Coalition to ensurethis growing movement builds on its successes.


Case study 8

The Enterprising Solutions Awards are annualnational social enterprise awards, started byRBS NatWest and endorsed by government, thataim to recognise and celebrate the best socialenterprises – imaginative, entrepreneurial,sustainable businesses that are passionate aboutsocial change. Applications can be fromenterprises regardless of size and legal structure(charitable, non-profit distributing, mutual, co-operative, community or socially directed). Intheir ninth year the Awards provide the sectorwith inspirational models and allow successfuland innovative social enterprises to benefit fromnational and regional media coverage.www.enterprisingsolutions.org


28 With many of the conditions for success in place,new challenges emerge. These were highlightedby the review of the strategy, and are the focus ofpart 2 of this plan. The actions and analysis havebenefited from a working group drawn fromacross government and the sector (annex 1).

29 Over recent months, the Government has beenconducting the largest-ever consultation with thethird sector, in preparation for the ComprehensiveSpending Review 2007. The consultation hasreached every region of the country. This actionplan forms the first response to this consultationprocess, setting out what the Government is goingto do to support growth in social enterprise. Theactions specified in this plan are primarily forgovernment – national, regional and local –working in partnership with social enterprises andtheir representative organisations.

30 Where we have clearly identified a need forgovernment action, the plan sets out how wepropose to meet that need. Where the evidence isinsufficient, or the solution unclear, we will invite

social enterprises and others with knowledge ofthe sector to help us build the analytical base andsolve these issues.

31 To play its part the sector needs to raise its ownprofile, make use of available tools to ‘prove’ itssocial impact, develop its capacity to deliverquality products and services to market, andattract and retain dynamic new entrants.


The international dimensionInternational thinking on social entrepreneurship, social enterprise and the social economy is evolving rapidly.The Office of the Third Sector is contributing to and learning from this, through building on links with the EUand other international partners and events such as the annual Skoll World Forum on Social Entrepreneurship.This includes working with colleagues in other EU Member States to share the results of the social economystrand of the EU-wide Equal programme and to use the results to inform policy.

Equal is a European Social Fund initiative which tests and promotes new means of combating all forms ofdiscrimination and inequality in the labour market through transnational co-operation. One of the thematicfields (Theme D) is the social economy. In the UK, Theme D projects have addressed the barriers to growth ofthe social enterprise sector. Over two rounds of Equal, UK projects worth approximately £40 million have beenfunded (half of the costs met by the Equal fund). Outputs include development of tools to measure qualityand impact of social enterprises, production of National Occupational Standards for managers of and advisersto social enterprises, development of a database of consultants for social enterprises, and work with localauthorities to increase procurement opportunities for social enterprises – seewww.equal.ecotec.co.uk/resources/gpg and www.equal-works.com. To ensure that this work has themaximum impact, the Office of the Third Sector is supporting the Social Enterprise Coalition in disseminatingand mainstreaming the learning from Equal projects – see www.socialenterprise.org.uk/Page.aspx?SP=1937

Colleagues in a number of Member States are organising events to share lessons from Theme D projects acrossEurope and develop policy recommendations – see for examplehttp://europe.eu.int/comm/employment_social/equal/activities/200604-se-etg2_en.cfm

As part of the independent review of the social enterprise strategy, an analysis was conducted of research onsocial enterprise policy and practice at European and global scales. The study focused on developments in fivecountries: France, Germany, Italy, Poland and the United States. The review highlighted there are many modelsof social enterprise operating across these countries, often in ways that address specific market failures. It alsofound similarities between the priorities of policy makers, particularly in terms of creating enablingenvironments for social enterprise to grow. Overall, the review concluded that the UK can learn frominternational social enterprise experiences, as well as being well placed to inspire developments in othercountries. www.cabinetoffice.gov.uk/thirdsector

An action plan forgrowth

2

We want to raise awareness of social enterpriseacross many audiences, to show that financialsuccess and social and environmental benefits canbe achieved together.

32 The traditional and accepted representation ofbusiness has focused on generating a financialreturn, but in reality this is only one of the reasonsthat entrepreneurs may look to start up a company.What motivates an entrepreneur may be as muchabout tackling social or environmental concerns as itis about generating a return for shareholders. At thesame time, both employees and customers aredemanding more socially responsible behaviourfrom businesses.

33 Successful social enterprises such as ECT Group,Greenwich Leisure and the Eden Project show that itis possible to combine financial and social objectives.But the DTI’s Household Survey found that only26 per cent of people were familiar with theconcept of social enterprise.19 This lack of knowledgeis likely to restrict people’s ability to make decisionsabout the type of business they set up, choose towork for, buy from, or invest in.

34 The lack of information may also restrict the abilityof social enterprises to influence the wider businessculture. Other businesses may be unaware of thetools and techniques needed to measure their socialimpact, or the possibility of meeting their corporatesocial responsibility obligations by making ethicalpurchases from social enterprises in their supplychains.

35 Sector representative bodies have a big role inraising awareness of what social enterprise can offer.Individual social enterprises could make better useof information about their social and environmentaladded value in the way that they market themselvesto customers and policy makers. But governmentalso has a role in helping to overcome theinformation failures.

36 Government can:n build the evidence of the impact and role of

social enterprises; andn use the evidence to raise awareness of social

enterprise among young people, businesses andother potential founders and employees.

Building the evidence37 In 2002, the Government’s social enterprise strategy

acknowledged that there was a major evidence gap.Individual firms found it difficult to measure theirimpact on people and places. The sector as a wholewas unaware of its size and characteristics.

38 Since then, the first national survey of socialenterprise has provided an initial snapshot of theshape and size of the sector.20 Emerging findingsfrom mainstream business surveys are starting toimprove intelligence about social enterprise withinthe broader economic context.21

39 At the level of the firm, tools for quantifying andusing information on social impact have beendeveloped, enabling individual social enterprises todevelop a much better understanding of how theyare able to deliver their social or environmentalmission. For example, the Government supportedthe Social Enterprise Partnership in producingProving and Improving: a quality and impact

toolkit for social enterprise (case study 9). Manysocial enterprises are now using these tools to provetheir value and improve their own marketing.


Fostering a culture of social enterprise

19 Small Business Service (2006b) Household Survey. London:Department of Trade and Industry.

20 IFF Research (2005) A Survey of Social Enterprise acrossthe UK. London: Small Business Service.

21 Small Business Service (2006a) op. cit.

2: An action plan for growth 29

Case study 9The DTI and Equal supported the Social EnterprisePartnership in producing Proving and Improving:a quality and impact toolkit for social enterprise.A range of tools and resources are featured,including an indicators bank, 10 steps to provingand improving quality and impact, and socialreturn on investment (SROI). The SROI Primer, anintroductory video, has also been produced. Socialenterprises can use these new resources todemonstrate to customers and policy makers howtheir activities contribute to a double or triplebottom line – delivering social and environmentalbenefits as well as economic ones.www.proveandimprove.org

Case study 10Project Cosmic is a ruralsocial enterprise providinga range of informationand communicationtechnology (ICT) servicesin Ottery St Mary, Devon.Set up in 1996 its

activities include a focus on overcoming the twinbarriers faced by rural communities: distance andisolation, which can lead to exclusion anddisadvantage. These activities include: deliveringits services in innovative and fun ways, which hasincluded a mobile ‘Space Shuttle’ with state-of-the-art equipment, visiting communities providingIT training to local people, and supplying othercommunity organisations and businesses with theirtechnology needs, such as websites and IT training.Chief Executive Julie Harris says: ‘Being a socialenterprise is like gold in the bank in credibility andmarketing terms. The public trusts you and it hastremendous power to attract new business,particularly the growingnumber of businesses witha social conscience. It is apriceless, unique sellingpoint.’ www.cosmic.org.uk

40 Most social enterprises are one-off, stand-alonebusinesses, created to address a particular, and oftenlocal, need or issue. However, some business modelsand methodologies developed in one sector orgeographic area may be able to be transferred andapplied elsewhere. The Community Action Network,Social Firms UK, the North East Social EnterprisePartnership and partners, supported by the PhoenixDevelopment Fund and the EU Equal programme,have investigated replication, using variousapproaches, ranging from franchising and licensingto less formal sharing of experience. There is scopefor the learning from these projects to bedisseminated more widely.

41 A deeper understanding of where and how socialenterprises can be most successful is now required.What factors make social enterprises successful?How can their direct and indirect impact bemaximised?

42 The Office of the Third Sector and the DTI’s SmallBusiness Service will develop a new researchprogramme to build further evidence on theeconomic, social and environmental value of thesector. The programme will, for example, look atthe development of social enterprise in the UK overtime (through the Annual Small Business Survey) andthe range of outcomes that social enterprises canpotentially bring to people and places (throughtargeted research and ‘think’ pieces). This work willbring together those people who are best placed tocontribute to the development of the overallevidence base.

43 Publicly available data on the demand for ethicalconsumption also needs to be improved. Someinformation on ethical consumerism is alreadyavailable. But more needs to be known about howit relates to social enterprise – not just about howethical markets are developing, but about howsocial enterprises can have a role in creating orserving these markets.

44 The Office of the Third Sector will commission areview of research on ethical consumer markets andhow they can affect social enterprises.

45 Building the evidence base provides the collateral toenable government and the sector to promote socialenterprise more effectively to a range of audienceswhich might include potential entrepreneurs,financiers and customers in public and commercialmarkets.

46 The Office of the Third Sector will use thedeveloping evidence base to raise awareness andunderstanding of social enterprise among a rangeof audiences, working in partnership with the SocialEnterprise Coalition and others in the sector.

Raising awareness: attracting newentrants

47 Social enterprise has become an increasinglyimportant part of this overall enterprise agenda.There is a chance to tap into the passion for ethicalbusiness by stimulating interest and engagement insocial enterprise – for example among youngpeople, those looking for career or life changes, andamong under-represented groups.

48 Feedback from organisations such as the NationalCouncil for Graduate Entrepreneurship emphasisesthe need for peer role models: people are mostinspired by people just like them who are making asuccess of running a social enterprise, such as TomSavage of Blue Ventures (case study 11).


Case study 11Tom Savage. One would notautomatically associate thediscovery of new species offish and the protection ofoctopuses in Madagascar withsocial enterprise. But that’swhat Tom Savage and hisbusiness partners have

achieved with their ecotourism organisation BlueVentures, which generates revenue for marineconservation projects in the Indian Ocean.A business studies graduate, Tom’s career began infinance, working at UBS Investment Bank andEdinburgh Fund Managers. It didn’t take him longto realise that, despite the financial incentives, thisline of career left little room for his passions –development, entrepreneurship, environmentalconservation and travel. Since starting BlueVentures, Tom – a finalist in the 2005 Daily Express

Young Entrepreneur of the Year awards – says hehas rediscovered the joys of working on somethinghe cares about that makes a difference. He has alsobeen working as the ‘social enterprise campaigner’for Enterprise Insight on the plans for SocialEnterprise Day. www.blueventures.org

Case study 12

Enterprise Insight runs campaigns

which aim to attract young people

aged 14–30 into enterprise. It was

founded by the UK’s main business

organisations and is primarily funded by the DTI.

It aims to encourage a more enterprising culture,

and in particular inspire more young people to have

ideas and make them happen – whether through

starting a business or a social enterprise, or through

pursuing an idea at work. It has a four-part strategy:

n to inspire young people to make their ideashappen;

n to inform them of next steps and opportunities;n to connect them through networks to support

each other; andn to influence policy and practice.

Social Enterprise Day now forms a key element ofEnterprise Week. Working in partnership, theOffice of the Third Sector, the Social EnterpriseCoalition and Enterprise Insight have developedthe Make Your Mark: Change Lives campaign tohelp inspire more young people to get involvedwith social enterprise. It aims to bring the benefitsof social enterprise to life through the stories ofyoung people who are using their enterprisingideas for social and environmental change. Newmaterial on social enterprise has been developedunder the ‘Change Lives’ banner. A magazine,Trailblazers, highlights the stories of young socialentrepreneurs, and a companion DVD gives a livelyexplanation of social enterprise.www.starttalkingideas.org


49 The Office of the Third Sector will therefore workwith the social enterprise sector to develop aprogramme to appoint 20 social enterpriseambassadors to raise awareness of social enterpriseand work with government on the development ofpolicy.

50 A specific campaign to attract young people tosocial enterprise has been developed, based aroundfeedback from focus groups showing that manyyoung people are looking for a dual benefit fromtheir careers: the chance to ‘make a difference’combined with the ability to earn a living anddevelop their own potential. The campaign MakeYour Mark: Change Lives is an integral part ofEnterprise Week 2006 and provides a focus for SocialEnterprise Day (case study 12). The Office of theThird Sector and the DTI will support a campaign topromote social enterprise, Make Your Mark: ChangeLives, delivered by Enterprise Insight working inpartnership with the social enterprise sector.

51 Social Enterprise Day is an opportunity for socialenterprises right across the country to showcasetheir achievements. It includes high-profile eventsdesigned to highlight the breadth of achievement of the sector.

Raising awareness through the education system

52 The Government also wants to ensure that socialenterprise is properly reflected within the educationsystem. Young people should be aware of theopportunities of social enterprise as they movethrough school and further or higher education,and as they make choices about employment.

53 Social enterprise is now a common feature ofenterprise education in schools (case study 13). In2003–05 the Department for Education and Skills(DfES) conducted pathfinders in 700 schools to findthe best way to encourage ‘enterprise capability’ inyoung people. Enterprise capability is aboutdeveloping creativity, innovation, risk taking, and acan-do attitude, and fostering the drive to makethings happen. The enterprise education strategy,based on this pathfinder work, encompassesenterprise capability, supported by better financialcapability and economic and businessunderstanding.



Case study 13

Enterprise Education covers enterprise capability,supported by better financial capability andeconomic and business understanding. ‘Enterprisecapability’ means innovation, creativity, riskmanagement and risk taking, a can-do attitudeand the drive to make ideas happen. This conceptof enterprise embraces future employees, not justfuture entrepreneurs.

All schools with Key Stage 4 pupils receiveStandards Fund money for a new focus onenterprise education. Funds total £60 million foreach of the three academic years 2005–08.

The Schools’ Enterprise Education Network,managed by the Specialist Schools Trust andlaunched in 2006, is based on 50 ‘hub’ and ‘spoke’schools. All enterprise specialist schools will getsupport too, and the network will embrace allsecondary schools.www.teachernet.gov.uk/teachingandlearning/14to19/ks4/enterpriseeducation/

54 Funding is now available to help schools deliverenterprise education to Key Stage 4 pupils. Thisenables them to seek outside help to deliver theirown enterprise agenda. In addition, a new Schools’Enterprise Education Network has been established,based on a network of 50 ‘hub’ and ‘spoke’ schools,which are involved with helping all schools inEngland deliver enterprise education. The guidanceto schools highlights good examples of socialenterprise, and often provides schools with valuableinput to their enterprise activity.

55 The Government wants schools to have theopportunity to deliver good-quality social enterpriseactivity to children (case study 14). The Departmentfor Education and Skills, supported by the Office ofthe Third Sector, will ensure that strengthenedguidance material on social enterprise is provided toschools, so that it features more prominently, andensure that good examples of how schools haveused social enterprise are widely promoted.

56 Social enterprise should be better integrated intobusiness studies curricula, so that children learn thatit is possible to combine their ideals of achievingsocial justice with running a successful business. Thisis already starting to happen. The Qualifications andCurriculum Authority (QCA) is currently reviewingthe subject criteria for all GCSEs. For business studiesthey will discuss with stakeholders how best toinclude enterprise and social enterprise as astandard feature of the specifications. The outcomesof that consultation will be available in spring 2007.First teaching of a revised qualification would be inSeptember 2009, and reviews of the A level andother business studies qualifications will follow.


Case study 14

Fyndoune Community CollegeWhen the Year 9 students at Fyndoune CommunityCollege, County Durham, discovered that theircounterparts in Ghana, West Africa, had to walk

miles to fetch filthy water before going to class,they decided to take action. What began as a desireto make a difference saw the pupils creating theirvery own social enterprise.

‘Selling water for water’ was the simple buteffective idea of ‘Water Works’. They did a dealwith Abbey Well to buy water for 30p a bottle, andnegotiated a loan from the school (now repaid) tobuy their stock, selling it for 50p a bottle.

‘Water Works’ has to date made a profit of £2,500and linked up with a school in Ghana, Adum BansoPrimary, which will soon have its very ownborehole.

‘Seeing them picking up a phone and talking tobig businesses, working to tight deadlines andlearning communication skills has been impressive’,says teacher Lynda Dixon. ‘The difference betweensocial enterprise and conventional business to me isthe passion – it’s not just a case of making moneyfor its own sake, but for achieving something moretangible.’www.durhamweb.org.uk/fyndoune

57 The Government believes that social enterprisebusiness models should have a higher profile withinGCSE and A level and other business studiescourses. The Office of the Third Sector and DfES willwork with QCA on how best to achieve the fullintegration of social enterprise business models intothe GCSE business studies syllabus, and thereafterinto A level and other business studies courses.

58 As young people move into further and highereducation, they have an increasing number ofcourses relating to social enterprise to choose from.In addition, it will be important to explore how bestto embed social enterprise into the overallvocational degree framework. There is a growinginterest from universities about how they canincorporate social enterprise preparation andawareness into their curricula, particularly intovocational courses. Other avenues, such as virtualcourses and e-learning, could also be explored.


‘At Leeds Met social enterprise is key to buildingfurther entrepreneurial capacity within staff andstudents. The exciting dynamic provided byengaging with social businesses, charities andnot-for-profit ventures is enhancing our curriculum,as well as developing entrepreneurial spirit andattitude in our students.’

Alison Price, Leeds Metropolitan University

15 Case study 15The National Councilfor GraduateEntrepreneurship(NCGE) was launched in2004 to raise theprofile of

entrepreneurship in higher education and as aresult increase the number of students andgraduates seriously considering and engaging inbusiness start-up in all its forms. Social enterprise isan integral part of NCGE’s activities.

These include:

n working with higher education institutions tohelp embed an entrepreneurial culture andentrepreneurship support across institutions andbuilding their capability and capacity;

n developing online communities for researchers,educationalists and careers advisers;

n the Flying Start scheme which aims to inspire,inform and support students and graduatesacross the UK who are interested in startingnew ventures. It consist of three parts – regionalrallies which include workshops on socialenterprise, investment readiness programmesincluding developing ones aimed at graduateswanting to set up social enterprises, and anonline support system; and

n including social enterprise, where appropriate,in any research being commissioned by NCGE. www.ncge.org.uk

59 The Department for Education and Skills willexplore new ways to provide and promote socialenterprise learning within the tertiary educationframework.

60 Careers advice, too, should include social enterpriseoptions. Publications such as the Ethical Careers

Guide are available, but careers services should be better informed about social enterprise.22

Appropriate guidance material should be availableto people thinking about their futures.

61 The Office of the Third Sector will support the DfESand the National Council for GraduateEntrepreneurship to promote social enterprise as apotential career to students in higher education.

Raising awareness among other businesses

62 Some social enterprises, especially those at the morecommercial end of the spectrum, are buildingcommercial collaborations with conventionalbusinesses. Many see working with the conventionalprivate sector as an important strategy for theirbusiness growth.

63 In 2005, the DTI’s Small Business Servicecommissioned research and a guide to collaboration,Match Winners (case studies 16 and 17).23 Thisidentified examples of partnerships such as business-to-business trading, supply chain relationships,franchising through a social enterprise model, andstrategic alliances between social enterprises andcorporate partners to win public contracts.

64 Now more companies need to understand theopportunities that social enterprise can offer.Corporate social responsibility programmes tend tofocus on opportunities such as volunteering,donations or mentoring the third sector, but socialresponsibility can also be embedded in businessrelationships.

‘I believe that social entrepreneurs have a role inevolving the business world. It is about the fusionof business sense with social responsibility, leadingto profit with principles.’

Carmel McConnell, Founder, Magic Breakfast.www.magicbreakfast.co.uk

65 To encourage links between social enterprise andthe conventional private sector, the Office of theThird Sector will spread the messages from MatchWinners about delivering real business benefitsfrom collaboration to a wider audience. This willinclude facilitating discussions with business leadersabout the drivers for commercial activity with socialenterprise.


23 Small Business Service and Community Action Network(2005) Match Winners: A Guide to CommercialCollaborations between Social Enterprise and PrivateSector Business. London: Small Business Service.22 NGO.media (2006) The Ethical Careers Guide 2006/07.

Case study 16

Match Winners is a guide to commercialcollaborations between social enterprise andprivate sector business. It showcases some real-lifebusiness partnerships between social enterpriseand the corporate sector, highlighting the real

business opportunities on both sides. The benefitsfor social enterprise include opportunities to openup new, sustainable revenue streams, access tomanagement expertise and an opportunity tosharpen up business skills. For the corporate sector,business partnership with social enterprise canoffer value across multiple business objectives suchas improving efficiency through supply chains,managing business operations, developing newmarkets or achieving corporate social responsibility.To order a free copy, email [email protected] or telephone029 2048 6000.

Case study 17

Green-Works is a social enterprise that removessurplus or unwanted office furniture for bigcompanies and government departments, andredistributes it at a reasonable cost to schools,charities, community groups and start-upbusinesses. It was itself a relatively new businesswhen it entered into a working collaborationwith HSBC to handle the furniture recyclingrequirements for the bank’s move to Canary Wharf.

For Green-Works, the deal proved to be hugelysignificant in terms of developing a track record tohelp them grow and gain future business, andimpart their core values about promotingenvironmentally friendly business practices into thecommercial decisions of a major corporate business.www.green-works.co.uk


We want to enable social enterprises to besuccessful businesses, by ensuring thatentrepreneurs have access to good advice andinformation.

Government’s role in providingbusiness support

66 There is a market for business support, and manysocial enterprises, like other businesses, will makeuse of consultants, accountants and lawyers whenthey need technical advice or to help to get theirideas off the ground. But small and youngbusinesses, facing tight capital constraints and acomplex advice market, can benefit from help inaccessing appropriate support. There is evidence, forinstance, that businesses that use support are moresuccessful than those that do not.24 Similarly,evaluation of support for social enterprises fundedthrough the Phoenix Development Fund foundmany social enterprises that said they would nothave existed if support had not been available.25

67 Government primarily provides a signposting role,ensuring that businesses are able to find the bestand most appropriate support available to them inthe market. It provides a gateway through BusinessLink, the government advice service for smallbusinesses that is managed by the RDAs. BusinessLink provides information, and, if appropriate,diagnoses of individual needs, and brokers supportfrom the most appropriate provider of specialisthelp (commonly known as the information,diagnostic and brokerage (IDB) model). To ensurethat advice is widely accessible, there is also aBusiness Link website – www.businesslink.gov.uk –which was used by 5.6 million different visitors in2005/06.

68 The challenge is to ensure that the diverse range ofsocial enterprises are able to access the support thatthey need, in the market or through governmentprogrammes.

Ensuring that support is appropriate for social enterprises

69 In many instances, social enterprises need very similaradvice and support to mainstream businesses.However, in some cases more specialist help may beneeded. This is particularly true in the start-up phase,when social enterprises have to choose betweendifferent legal forms and need to account for socialas well as financial bottom lines. Other key areaswhere social enterprises may need specialist adviceand support include access to finance, marketing andgovernance. Because social enterprises are diverseand operate in a large number of sectors, they oftenalso need sector- or trade-specific support.

70 Understanding of the support social enterprises needand how they access that support has grown, andthe Review of the Social Enterprise Strategy notedthat, over the period of the strategy, ‘there has beenan increase in the availability of appropriate businesssupport for social enterprises’.26 However, in responseto the HM Treasury/Cabinet Office review of the role of the third sector in economic and socialregeneration, some issues have been raised asrequiring further action.


Ensuring that the right information and advice areavailable to those running social enterprises

24 Roper, S, Hart, M, Bramley, G, Dale, I and Anderson, C(2001) ‘Paradise Gained? The Business Link Tracker Study’in Conference Proceedings (Vol 2) of 24th ISBA National Small Firms Conference, Leicester, November 2001.

25 Ramsden, P (2005) Evaluation of the PhoenixDevelopment Fund. London: Small Business Service.

26 GHK (2005) Review of the Social Enterprise Strategy:Summary of Findings, section 6(ii). London: SmallBusiness Service.


71 First, despite significant progress in many areas,responses to the consultation cited uneven provisionof appropriate support services for social enterprises,from region to region. Second, the complexity ofthe support landscape, including links betweenmainstream and specialist support providers, canmake it difficult to identify the support that isavailable. Third, some organisations in the sector arenot accessing the full range of services that areavailable to them because they do not considerthemselves to be within the remit of Business Link.27

Fourth, there is a continuing need to make sure thatmainstream business advisers are able to meet theneeds of social enterprises.

72 Some steps have been taken to address these issues.National Occupational Standards for advisers tosocial enterprises have been developed by the SmallFirm Enterprise Development Initiative (SFEDI) andthe Social Enterprise Partnership (SEP) to clarify theknowledge required by advisers and so improvequality of support – www.sep.co.uk. In addition,training materials have been developed to helpadvisers to meet these standards.

73 RDAs are supporting delivery of the overall socialenterprise strategy in their regions. In particular,through the Business Link service, they willimplement, market and monitor the supply ofappropriate business support accessible to socialenterprises – taking account of customer feedback.The DTI and RDAs have conducted a joint review ofbusiness support for social enterprise across all nineEnglish regions. This review will collate goodpractice, including approaches to ‘mainstream’ and‘specialist’ business advice requirements andprovision. The information gained from this reviewwill be used to develop a plan, to be in place byMarch 2007, for improving standards across all RDAs.The Office of the Third Sector will support RDAs toimplement the plan.

74 The Office of the Third Sector will provide fundingfrom April 2007 to RDAs to improve Business Link’scapacity to broker business support for socialenterprises consistent with the cross-Governmentbusiness support simplification programme. From aninitial pilot level of at least £0.5 million in 2007/08,the funding will rise to £1.8 million per year fromApril 2008 to March 2011, subject to the outcome ofthe 2007 Spending Review. The RDAs will work withstakeholders, including specialist support agencies,to use the money to meet the support needs of

social enterprises in their region. The Office of theThird Sector will work with RDAs to developbaseline measures and evaluate impact over thelifetime of this intervention.

75 To reach as wide a range of social enterprises as possible, the DTI will improve the social enterprise information and guidance onwww.businesslink.gov.uk/socialenterprise, making ita successful single source of information for socialenterprises. Some improvement to the content hasalready been made, including extra links to additionalsources of advice, many of which have beendeveloped by the sector.

76 As described in part 1 of this document, socialenterprises emerge from different backgrounds.Some will mirror the start-up route of manybusinesses, led by an individual or a group of peoplewith a business idea. Others may grow fromvoluntary and community sector organisationslooking to diversify their income by developing atrading activity.

77 The Government’s ChangeUp programme was set upto strengthen the support and assistance availableto voluntary and community organisations, whichinclude social enterprises. ChangeUp is now beingimplemented through Capacitybuilders, anarm’s-length implementation body, which aims to

27 BRASS (2004) Turning Big Ideas into Viable SocialEnterprise, p.4. Bristol: Triodos Bank.


secure a high-quality, sustainably fundedinfrastructure for frontline voluntary and communityorganisations. This includes providing grants toinfrastructure bodies. Together, Business Link andCapacitybuilders should ensure that the full range ofthird sector organisations, from voluntary groupsrelying on donations and volunteers to socialenterprises operating as businesses, can access thesupport they need to help them achieve theirpotential.

78 Capacitybuilders will fully integrate support forsocial enterprise infrastructure into its new strategicplan for delivering ChangeUp’s objectives, and willreport on its impact on social enterprises in itsannual evaluation. Capacitybuilders will consult onthe content of its plan from December 2006 toMarch 2007.

79 Peer group support from businesses operating in asimilar environment can be an effective way ofsupporting social enterprises. All the English regionsnow have social enterprise networks, many of which

have been supported by the RDAs. They are wellplaced to work with mainstream agencies both toprovide specialist expertise and actively toencourage their members to access the full range ofbusiness support by working in partnership withBusiness Links. Case study 18 shows how one of theregional organisations, Social Enterprise EastMidlands, has worked with an RDA to pilot newbusiness support arrangements.

80 The Office of the Third Sector will work withpartners to identify national, regional, sub-regional,local and sectoral social enterprise networks. Stepswill then be taken to address any gaps in provision.

Case study 18

Social Enterprise East Midlands (SEEM) piloted aspecialist IDB service across the East Midlands inpartnership with East Midlands DevelopmentAgency (emda) and regional Business Linkoperators (BLOs). It looked at how IDB servicescould best meet the needs of social enterprises.Social enterprises approaching BLOs, SEEM andspecialist Business Link advisers were offered atailored information and diagnostic service andreferral onwards to appropriate business support.The Business Services Directorate at emda are nowworking with SEEM to embed the findings of thepilot into the mainstream provision of IDB services,which is being delivered through the Business Linkbrand. emda is keen to ensure that socialenterprises are deriving tangible benefit from theprovision of mainstream IDB services in the region.www.seem.uk.net


Case study 19Heather Wilkinson is thefounder of Striding Out, asocial enterprise that coachesand supports young socialentrepreneurs. Heather’spassion for socialentrepreneurship stemmedfrom a Master’s degree in

Economic Development and Community Enterprise,followed by a series of six-month work placementsin the public and private sectors. As a researchconsultant, Heather learnt how to plan and runprojects to support people into enterprise,employment and training. But she began to see arole for a new style of business support servicewhich would bring together entrepreneurs underthe age of 30 to coach, train and support eachother. In particular, she wanted to educate andinspire them about social enterprise andsustainable business practices. Striding Out waslaunched in November 2005. Through its training,coaching and consultancy services, it has alreadysupported more than 300 young entrepreneurs.Heather was recognised in the 2006 Edge UpstartsAwards as ‘Social Enterprise Mentor of the Year’.www.stridingout.co.uk

Improving skills in social enterprises81 Like other businesses, social enterprises can benefit

from training and mentoring that helps them toimprove the skills of their workforce and theirleaders. In many cases, mainstream skills provisionwill be relevant to social enterprises and it isimportant that social enterprises are able to accessthis alongside conventional businesses.

82 As well as technical business support andmainstream skills provision, there are some areaswhere tailored training of the managers and staff ofsocial enterprises can increase the effectiveness ofthe organisation. To clarify the knowledge that isneeded by managers of social enterprises, NationalOccupational Standards have been developed bySFEDI and SEP. Information on training that isavailable to develop skills in social enterprises is now available via the social enterprise training and support website, www.setas.co.uk. Trainto Gain, the new national employer trainingprogramme, is now in operation across the wholeof England and is inclusive of social enterprises.Their low-skilled employees, without a first full Level2 qualification or with skills for life needs, areeligible for free training through Train to Gain.

83 The Government wants to improve the overall skillsprovision in the UK. In 2004, it commissioned SandyLeitch to lead an independent review of skills. Hewas asked to identify the optimal skills mix for theUK in 2020 in order to maximise economic growth,productivity and social justice. An interim report waspublished in 2005, and the final report is due to bepublished shortly.28 More recently, responses to theHM Treasury/Cabinet Office review of the thirdsector’s role in economic and social regenerationhave identified skills as a barrier to growth acrossthe third sector. This reveals a need to understandwhat, if any, the particular skills gaps are in socialenterprises.

84 The Office of the Third Sector, supported by the DTIand DfES, will commission a review to understandthe specific skills needs of social enterprises andwhether they are met by mainstream businesseducation and training networks and organisations.This will feed into the Comprehensive SpendingReview 2007.

28 Leitch Review of Skills (2005) Skills in the UK: The Long-term Challenge. Interim report.

We want to ensure that social enterprises are ableto access finance in the market.

85 Social enterprises, like all businesses, need adequateaccess to capital to grow and to operate efficiently.It is therefore of concern that social enterprises aremore likely than conventional small and medium-sized enterprises (SMEs) to cite access to finance astheir most significant barrier to growth.29

86 The UK’s financial markets are seen by many to beamong the most efficient in the world. The fact thatsome enterprises report difficulties in accessingfinance is not in itself an indication of a marketfailure. However, there can be failures in financemarkets which mean the ‘right’ amount of finance isnot always provided by the market for reasons thatare unconnected with the viability of the proposal.These often stem from information asymmetriesbetween the borrower and the lender, which meanthat the lender does not have enough informationon which to base an accurate assessment of risk. Ifviable businesses fail to access the capital they need,the nation as a whole loses the potential economicbenefits, in terms of employment and outputgrowth and productivity improvements from newbusiness formation and growth. This is the rationalebehind the range of government interventions to

help small and particularly high-growth businessesto access finance in the market.

87 The challenge is to try to understand whether thedifficulties faced by social enterprises are a result ofmarket failures, or the product of an efficientmarket that tends to value financial over socialreturn. Work to establish ways of quantifying thevalue of an organisation’s ‘social’ mission is animportant contribution to creating a market in socialinvestment, which takes account of social as well asfinancial impact.

88 Social enterprises make use of a range of finance,from grants to equity investments, reflecting thediversity of models in the sector and the stage ofdevelopment. Government’s main concern is toensure that viable social enterprises are able toaccess the finance they need in the debt and equitymarkets.

89 Below, we look at the evidence base, access to debtand equity finance, and tax incentives forinvestment in social enterprises.

Evidence90 In 2002, when the Government’s social enterprise

strategy was published, evidence relating to thefinancing of social enterprises was largely anecdotal.

To address this, the DTI commissioned the Bank ofEngland to investigate the issues affecting socialenterprises in accessing finance.30

91 Building on the Bank of England’s report, the DTI’sSmall Business Service has conducted a major surveyof the experiences of social enterprises in accessingfinance, to be published early in 2007.31 It providesthe most robust and far-reaching evidence base todate, and shows that in many ways the situation forsocial enterprises appears to have improved sincethe Bank of England’s 2003 report was published.The early findings from the DTI survey are detailedin this section.


Enabling social enterprises to accessappropriate finance

29 DTI (forthcoming) Finance for Small and Medium-SizedEnterprises: Comparisons of Social Enterprises andMainstream Businesses.

30 Bank of England (2003) The Financing of SocialEnterprises. London.

31DTI (forthcoming) op. cit. Due to methodologicalconstraints, the survey only covered established socialenterprises registered as companies limited by guaranteeor industrial and provident society, which means that bydefinition it did not include many social enterprises thatwould be able to attract equity investment.


Case study 20UnLtd is a charitableorganisation set up in 2000to promote socialentrepreneurship. In 2002 itwas granted a £100 millionlegacy by the MillenniumCommission which it hascarefully invested to fund itsMillennium Awards schemein perpetuity. UnLtd is alsothe lead delivery partner ofThe Big Boost programme,funded by The Big Lottery

Fund, which gives awards to young people to set upcommunity projects. UnLtd’s awards programme givesboth practical and financial support to socialentrepreneurs and is available at two levels:

n Level 1 Awards are designed to help make newideas become real projects. UnLtd gives out 1,000 ofthese each year across the UK. They help individualsor informal groups of people who want to set upnew projects in their spare time. The money is tohelp with the running costs of the project.

n Level 2 Awards support projects that are alreadydeveloped or pay for the living expenses of awardwinners to help them devote more time to theirprojects. www.unltd.org.uk

Nathalie McDermott, a recipient of two separate UnLtdawards, went on to set up On Road Media, a socialenterprise that trains and employs reporters who are atthe centre of the stories they are covering. It makesradio documentaries for the BBC and works with thethird sector to promote their issues through ‘citizenmedia’ or podcasting.

‘UnLtd gave me the kick-start I needed to see if my ideacould work; I received a Level 1 award in 2005 whichenabled me to buy equipment, train our first reporterand produce our first documentary. In 2006 I secured aLevel 2 award which, crucially, allowed me to devote allof my time to developing a sustainable social enterprise.

‘In November this year, UnLtd is sending me and nineother social entrepreneurs to India to meet ourcounterparts and share learning. UnLtd does not justgive grants; it gives practical and moral support todevelop organisations and the individuals, like me,behind them.’

92 While our evidence base is improving, some gaps stillremain. In particular, there is a lack of evidence of theway in which social enterprises are financed at start-up. Some grants are available to new entrepreneurs,including the Millennium Awards run by UnLtd (casestudy 20). Acquiring more evidence on the start-upneeds of new social enterprises is an issue that theOffice of the Third Sector will be looking to address,in consultation with the sector.

Access to debt finance93 The Bank of England study (2003) found that

demand for debt finance among social enterpriseswas often limited by the availability of grants and acultural aversion to borrowing. More establishedsocial enterprises had used a range of externalfinance instruments supplied by banks, foundationsand community development finance institutions(CDFIs), although social enterprises were more likelyto have been rejected for bank finance than otherSMEs.

94 The Government’s approach to addressing problemsin the supply of debt finance to social enterpriseshas been both to increase knowledge and awarenessamong lenders about social enterprises32 and also tointervene to extend the supply of finance toorganisations that commercial lenders might(perhaps mistakenly) consider too risky. For example,the Government has, through the Phoenix Fund,supported the creation and growth of CDFIs, whichare themselves mostly social enterprises, to increasefinance to businesses and social enterprises indeprived communities. Recent research by theCommunity Development Finance Associationsuggests that about half the loans (by value) madeby CDFIs are to social enterprises (about 25 per centby number). Support for the CDFI sector has now

been devolved from the DTI to RDAs and furtherfunding has been allocated to RDA budgets tosupport social enterprises. As set out in annex 2,RDAs will review existing investment in socialenterprise via CDFIs and consider dissemination ofgood practice models.

95 The Government has also established the multi-million pound Futurebuilders fund and theAdventure Capital Fund, which offer longer-termfinance arrangements and development support tosocial enterprises and voluntary and communitysector organisations involved, respectively, in publicservice delivery or community enterprise. This moneyis intended to build organisational capacity and, inthe longer term, to build demand for conventionaldebt finance in organisations that are currentlyunable to access finance in the market.

96 The forthcoming DTI finance survey indicates that, inmany ways, the ability of social enterprises to accessfinance in the market has improved since the timeof the Bank of England report in 2003. The surveyfound that 66 per cent of established socialenterprises used commercial finance, although thisremains lower than usage by SMEs, at 80 per cent.The difference may in part be explained by a muchhigher use of grant finance by social enterprises.Grants can play a useful role in the start-up or early

expansion phases of a social enterprise, or anybusiness. However, grants are often used to ‘buy’particular outcomes, rather than to enable theentrepreneur to grow the organisation in the waythat they would like. Evidence shows that increaseduse of commercial finance correlates to a reduceddependency on grants, which may allow theentrepreneur more freedom.33

97 In contrast to the Bank of England research, the newDTI survey found that rejection rates for commercialdebt finance for established social enterprises andSMEs did not differ significantly (around 10 percent), and the cost of borrowing appeared to bebroadly the same. There may be several reasons forthis improvement. Social enterprises may be puttingforward better proposals to lenders, but also lendersmay be becoming more adept at assessing the creditrisks attached to lending to social enterprises. Thesurvey validates lenders’ interest in the sector; just14 per cent of social enterprises exceeded theiroverdraft limit in the previous year against 26 percent of SMEs.


32 The Small Business Service published a report targeted atlenders presenting case studies of a number of successfulexamples of social enterprises accessing commercialfinance. SBS (2004) Lending to the Social EnterpriseSector. London: Small Business Service.

33 DTI (forthcoming) op. cit.

98 It appears therefore that, in many respects, theability of established social enterprises to access debtfinance has improved. Where the 2006 survey resultswere less positive, however, was in the finding thatestablished social enterprises (particularly smallones) were more likely to feel discouraged fromapplying for finance than SMEs, which implies thatthey believe they will be rejected, despite the factthat the evidence suggests that they are no morelikely to be. Government and the sector can play arole in trying to overcome this perceived barrier. Inthe first phase of the social enterprise strategy, theSmall Business Service supported Project North East(PNE) to develop and pilot financial awarenesstraining materials for social enterprises. PNE workedwith the Social Enterprise Coalition and theCommunity Development Finance Association tomake the materials available to trainers. Thematerials were well received, and now need to bemade available to a wider audience.

99 The Office of the Third Sector and the DTI’s SmallBusiness Service will roll out financial awarenesstraining for social enterprises, working with theRDAs and the social enterprise sector.

100 In addition the information and advice provided bygovernment to help businesses understand theoptions available to them in financing their activityneeds to be made relevant and accessible to socialenterprises.

101 The DTI’s Small Business Service will include socialenterprise within mainstream ‘access to finance’interventions, such as making the next edition ofthe No Nonsense Guide to business finance moreinclusive of social enterprise.

102 In order to help viable businesses that lack securityto access loan finance, the Government offers aguarantee to lenders to take the place of thesecurity provided by the business itself. Participatinglenders can make use of the Small Firms LoanGuarantee partially to underwrite lending to socialenterprises, providing the conditions of the schemeare met.34

103 The Department for Communities and LocalGovernment (DCLG) and the Office of the ThirdSector have been leading work to consider ways inwhich to facilitate an increase in communitymanagement and ownership of assets. Thedevelopment of an asset base can help anorganisation earn income and secure futureborrowing. This issue is covered in more depth laterin this plan.

Access to equity finance104 While the supply of debt finance, particularly

secured debt finance, appears to be increasing,social enterprises still report difficulties in accessingmore high-risk investment. This lack of equity isoften perceived to be a barrier to high-growth socialenterprises, and the Bank of England reportidentified a need for some form of ‘patient’ capital.


34 The question of whether to lend using the SFLG is acommercial decision for the lender to take.

The forthcoming DTI survey found that larger socialenterprises received significantly less finance thansimilar-sized SMEs in absolute terms, although theamounts obtained were a similar proportion of thatsought in both cases. It may be that larger socialenterprises, with a smaller capital base thanequivalent SMEs, are discouraged from seekingmore debt finance because it would require a highergearing than they or the banks are willing totolerate.

105 The Bank of England summarised the reasons forthe lack of equity in social enterprises as:n the difficulty of providing a commercial financial

return, as social enterprises tend to want toreinvest most of their profits into their socialmission;

n ownership issues, which mean that socialenterprises are often unwilling to cede control tooutside investors, for fear of mission-drift, andindeed may be unable to do so, because of theirlegal structure; and

n the lack of a secondary market for investments insocial enterprises.

106 However, there are investors in the market, rangingfrom trusts and foundations to ethical investors,that are prepared to take a blend of financial andsocial return, and may be willing to invest in anorganisation in a way that does not take a sharein the ownership of the enterprise.

107 In order to increase private investment, and to raiseawareness of the possibilities among new investors,the Office of the Third Sector is supporting aresearch project by the Saïd Business School inOxford into the feasibility of a ‘social’ capitalmarket, in which investors interested in a blendedsocial and financial return might be able to makeand trade investments.

Case study 21

The SETsquared Partnership brings together theenterprise activities of the Universities of Bath,Bristol, Southampton and Surrey. Since itsestablishment in 2002, it has supported more than200 ventures, with three Alternative InvestmentMarket (AIM) flotations of a combined marketcapitalisation of over £150 million. The supportprogramme, entitled ‘Social IP’, aims to create newsocial enterprises that have global potential. SocialIP will be a vehicle to convert intellectual property,software, know-how, and other technologygenerated by the universities’ research anddevelopment activities, into successful, financiallyself-sustaining technology companies which havesignificant impact on society and the environment.As well as providing professional support, theSETsquared Partnership is working with privateinvestors, foundations and funds to encourageinvestment into these new social enterprises.

Examples of current Social IP businesses include:landslide prevention, care-alert systems for severelydisabled people, water purification in disasterrelief, and screening for learning difficulties inpre-school children. www.setsquared.co.uk


108 The Office of the Third Sector has also commissionedtwo projects to investigate methods to encourageprivate investment in social enterprises. They willtest the assumption that there is both the demandfor investment among suitable social enterprises,and the supply from investors willing to take ablended financial and social return. They willestablish whether the lack of a network, or otherinfrastructure that can bring together investors andfirms, is the major barrier to the growth in socialinvestment. One project will research methods forattracting new investors to provide appropriate debtand loan or ‘quasi-equity’ products for socialenterprises. The second project will researchmethods for matching business ‘angel’ investorswith suitable social enterprises.

109 Outside the social enterprise sector, the Governmenthas sought to address the market failures that arisein the equity market, not merely because ofinformation asymmetries, but also because of thecosts of applying the process of due diligence torelatively small investment decisions. TheGovernment has worked with the market toestablish a range of interventions, including EarlyGrowth Funds and Enterprise Capital Funds.

110 It is unlikely that many social enterprises will benefitfrom these interventions, because of the level ofreturn required and because many social enterprisesdo not issue shares that funds can buy. The Office ofthe Third Sector would therefore like to scope thefeasibility of improving the Government’s currentinterventions to reach social enterprises by attractinginvestors that are interested in a blended financialand social return and by testing different ways ofstructuring investment. Co-investment by the publicsector may act as an incentive for the private sectorto invest in this market, and may help to demonstratethe viability of investments in social enterprise. Thefirst phase will be to develop the proposal inconsultation with the social enterprise and financesectors, to assess demand, and to determine the mostappropriate model. Subject to the consultation, theOffice of the Third Sector will then make available upto £10 million for investment.

111 The Office of the Third Sector will consult on howbest to use these resources to improve the marketfor finance for social enterprises.

Tax incentives for investment in social enterprises

112 Government uses the tax system to encourageinvestment in businesses, particularly where thereis sub-optimal supply. For example, the EnterpriseInvestment Scheme (EIS) and Venture Capital Trusts(VCTs) have been successful in encouraging equityinvestment in small, unquoted companies (operatedon a commercial basis, for profit), that mightotherwise fail to attract funding because of theproportionally higher costs involved in investingin smaller businesses.

113 The EIS provides 20 per cent income tax relief and arange of capital gains tax exemptions to encouragedirect investments in small businesses. Investments inVCTs attract 30 per cent income tax relief and capitalgains tax exemptions, with the VCTs then onward-investing the money into a portfolio of smallunquoted companies. These reliefs can be used bysocial enterprises that have the appropriate structures.


114 Enterprises in disadvantaged communities (includingsocial enterprises) can also benefit from CommunityInvestment Tax Relief (CITR) which incentivisesinvestments of up to £250,000 via CDFIs. Individualand corporate investors in CDFIs receive five per centtax relief each year for five years. As of September2005 over £27 million had been raised through CITR.

115 In the responses to the HM Treasury and Office ofthe Third Sector review of the third sector ineconomic and social regeneration, Government hasreceived representations about the incentivesavailable to social enterprises. We are aware ofsuggestions about how, for example, the operationand delivery of CITR might be strengthened to thebenefit of social enterprise. HM Treasury and theOffice of the Third Sector are therefore jointlyconducting a review of the operation of CITR, alongwith the Small Business Service and HM Revenueand Customs. Building on the constructive dialoguealready under way with the CommunityDevelopment Finance Association and its members,the Government invites evidence from all interestedparties on how the operation of CITR and otherincentives might be improved. We will reportprogress with the review in Budget 2007.



We want to ensure that social enterprises are ableto influence public policy in their areas of expertise,including shaping and delivering public services.

116 Social enterprises often share the concerns faced bypublic policy makers, and are equally engaged infinding solutions to tackle social inequalities orenvironmental problems. As a result, many of themtrade in markets where the public sector is themajor customer, such as community transport, wastemanagement, children’s services, or health and socialcare. In such circumstances, social enterprises act as adelivery partner with government, providing serviceson contract to central or local government, primarycare trusts or local authorities. At their best, socialenterprises can bring valuable engagement withservice users and are often motivated to pioneernew approaches to meet the needs of their clients.So, where government is procuring services andsocial enterprises and other third sectororganisations meet the required standards of qualityand value for money, the Government will positivelyencourage their involvement in design and deliveryof public services.

Case study 22

Hackney Community Transport (HCT), set up in1982 initially to provide community transportservices in Hackney, has expanded into a large,successful social enterprise.

Among HCT Group’s portfolio of services aremainstream bus routes operated under contractfrom Transport for London; transport for peoplewith special educational needs, learning difficultiesor daycare needs, operated for a number ofLondon boroughs; a significant fleet of ‘MyBus’yellow school buses in West Yorkshire; and theLeeds AccessBus Service.

These services have been won by HCT in opentender. HCT only competes for contracts that havehigh levels of accessibility and quality in thespecification. HCT has challenged both public andprivate sectors in the delivery of services, but willwork with all sectors to provide high-qualitypublic services.

Surpluses generated from commercial activity areinvested in community transport. HCT sees theprovision of high-quality public services as a goal initself, but the investment in responsive communitytransport services is made possible by running thecommercial activity well. HCT acts as an advocatefor people unable to use mainstream transport and actively seeks user input into the design anddelivery of all its services. www.hackneyct.org

Enabling social enterprises to work withgovernment

117 The Government’s interest in social enterprise is notlimited to the delivery of services, however.Other social enterprises, such as social firms, retailco-operatives or development trusts, may operatein commercial or consumer markets, but generatewider public benefits through, for example,employment or training of disadvantaged peopleor the regeneration of a deprived area (case study23). In such cases they are offering a market-based,business solution to a social problem.

118 There are many individual examples of socialenterprises doing business with government atcentral or local level to improve society or to helpthe environment. However, there are also barriers toeffective engagement that may be preventing socialenterprises from achieving their potentialcontribution, whether they are operating in publicor private sector markets. Some of these may relateto scale and capacity, which the Government isworking with the sector to address, as set out in theprevious two sections on advice and finance.In addition:n where social enterprises would like to deliver

statutory services, barriers in the commissioningand procurement processes may prevent themfrom doing so;

Case study 23Recycling Unlimited started life asa mental health charity in 2002,after its founding manager EddieBrooks had himself experiencedmental ill-health. It now pitchesitself as a socially inclusive socialenterprise that provides training

and job experience opportunities in vocationalskills such as joinery and carpentry, retailing,gardening and horticulture to people from diversebackgrounds. It also delivers English for Speakersof Other Languages (ESOL) and basic skills trainingand job search advice and guidance.

The business earns a major portion of its incomefrom trading activity. It recycles wood from oldpallets into garden fencing, trellises and othereveryday garden furniture, which it sells to thepublic and a few local shops.

Eddie’s plans for growing the business includeexpanding the five gardens it currently owns, andsecuring a local pub with land to grow organicfood for use in the pub.

Eddie’s past experience in commercial business isreflected in his passion for social enterprise. InOctober 2006 he won the Yorkshire and HumberSocial Entrepreneur of the Year Award. He says: ‘Wedon’t just recycle things, we recycle people too.’

n more could be done to address informationbarriers to help policy makers assess whethersocial enterprise is the most effective way ofdelivering public policy objectives, and to tacklepractical barriers to social enterprise playing agreater role; and

n social enterprises need to raise their profile andcredibility with policy makers, to enable theirpotential to deliver services in new ways to berecognised, and to increase opportunities forgrowth of the sector.

119 The Government is putting in place steps to addressthese three issues. The rest of this section looks ateach in turn.

Improving the way in which publicservices are delivered

120 First, the Government has focused on addressingbarriers to social enterprises delivering publicservices on contract. Departments initiallyconcentrated on providing guidance and trainingfor social enterprises, commissioners andprocurement professionals, where this was limited,and spreading good practice through case studies ofsuccessful social enterprise contracts. Other workhas included:



n a toolkit to help social enterprises win publicsector contracts;35

n Office of Government Commerce training forpurchasers on diversifying suppliers;

n EU-funded projects, delivered by the sector, tounderstand the impact of procuring publicservices through social enterprise;

n the creation of the £125 million Futurebuildersfund to build the capacity of the third sector,including social enterprises, to help deliver publicservices (case study 24);

n updating HM Treasury Guidance to Funders and

Purchasers: Improving Financial Relationships

with the Third Sector (2006); and n capturing social enterprise experience through,

for example, Small Business Service research intothe value of SMEs in public sector markets in200536 and the Local Area Pathfinders jointproject in 2006 between HM Treasury and theOffice of the Third Sector.

Case study 24

Futurebuilders England is an innovative£125 million investment fund to assist frontlinevoluntary and community organisations and socialenterprises in building their capacity to increasethe scale and scope of their public service deliveryin England. www.futurebuilders-england.org.uk

One example of asocial enterprise thathas benefited from aFuturebuilders loan isBuilding Blocks

Solutions, a small social enterprise based inMansfield, Nottinghamshire. Set up four years agoby a husband and wife team – Gill and GrahamGardiner – it provides a range of innovative andhigh-quality services to adults with mental healthneeds across Nottinghamshire. It has now growninto a successful business with a turnover of£700,000, employing 28 staff. Giving frontline help

to people in the community, Building Blocks runs aseries of programmes to help people with mentalhealth problems lead fulfilling and sustainable lives.This includes support, advice and guidance withhousing, benefits, pensions and employment andtraining needs.

With financial support and investment fromFuturebuilders England, Building Blocks hasrecently expanded First Steps, a scheme designedto support GPs by offering non-medical assistanceto patients with low-level mental health andemotional difficulties, who don’t needprescriptions, counselling or intensive psychiatricservices. Building Blocks developed First Stepswhen local GPs asked what it could provide forthese patients. By freeing up GP time andproviding effective signposting for patients, theservice is helping to reduce the impact on healthand social care services, as well as offering morechoice to patients. www.buildingblocks.org.uk

35 Department of Trade and Industry (2003) PublicProcurement: A Toolkit for Social Enterprise. London: Department of Trade and Industry.

36 Small Business Service (2005) A Study on the Benefits ofPublic Sector Procurement from Small Businesses.www.sbs.gov.uk

121 As a result of this work, the external review of theGovernment’s strategy concluded that there hadbeen significant improvement in social enterprises’profile among policy makers. There are now somehigh-profile examples of social enterprises winningcontracts with central and local government, andalso, as a result, influencing the way commissioningis done to ensure a better service to the user.

122 In certain sectors, there are successful examples ofservices that were previously delivered by the publicsector now being delivered by social enterprisemodels, for example in the leisure sector wherethere are now more than 100 leisure trusts runninglocal services.

123 However, we know that too often social enterprisescannot compete fairly on a level playing field withother potential providers.37 In order to address thecontinuing barriers in the delivery of public servicesby the third sector, the Government will implementa cross-departmental third sector public servicesaction plan, to be published later in 2006. The publicservices action plan covers the whole third sector,which faces many shared problems. The action planwill seek to build the capacity of social enterprisesand the wider third sector to design services, deliverthem, and help services to become moreaccountable.

124 The objective of the public services action plan is toensure that government and the sector can worktogether in equal partnership to improve services. Itwill identify the areas of opportunity for the sector,and include action to improve commissioning andcontracting practice, building on the social exclusionaction plan38 and the Local Government WhitePaper.39

125 The Local Government White Paper sets out a rangeof measures to improve local government services,including through contestability and open and faircompetition. These include increasing the role ofcompetition where services are underperformingand a code of practice on competition. TheDepartment for Communities and Local Government(DCLG) will also be working with the AuditCommission to clarify and if necessary strengthenthe role of the appointed auditor in responding tocomplaints from service providers about unfair andunlawful procurement.

126 The Local Government White Paper is encouraginglocal authorities to move away from a narrowlydefined approach to service delivery towards acommissioning role through a framework set out instatutory guidance. To complement this, DCLG withother government departments, commissioners and

providers will be exploring opportunities to developand shape the local government services market.

127 To accompany the White Paper, DCLG has publisheda report, setting out a framework for improvingservices, including through the growth of a diverseand competitive market, in which social enterpriseswill expect to play a growing role.40 In particular, itidentifies a number of potential growth areas for thesector, including mainstream and specialist busservices, municipal waste collection and recycling,community sport and youth services. The report alsoencourages the sector to improve the quality ofservices by challenging existing service deliverypatterns. A discussion paper to be published byDCLG at the end of the year will explore thepotential in some of these areas in more detail.


37 National Audit Office (2005) Working with the ThirdSector.

38 Cabinet Office (2006) Reaching Out: An Action Plan onSocial Exclusion.

39 DCLG (2006) Strong and Prosperous Communities – theLocal Government White Paper.

40 DCLG (2006) Developing the Local Government ServicesMarket to Support a Long-term Strategy for LocalGovernment.

128 The North East Regional Centre of Excellence (RCE)has been appointed the lead centre to co-ordinateand promote the RCEs’ activity on social enterprisesand other third sector bodies. It will develop, overtime, a national programme of capacity buildingwork to drive efforts to improve commissioning andprocurement practices in relation to the third sector,including: standard contracts and contract solutions;awareness and skills training for elected membersand senior officers; access to specialist guidance andsupport; and to encourage more effective dialoguebetween commissioners and providers in thethird sector.

129 One issue often raised by third sector organisationsis the fact that they may bring additional benefits topublic services that are not accounted for in theprice of the contract. There is a range of ways inwhich organisations’ broader social benefits can befactored into funding relationships, in order toencourage the growth of effective services. Theseapproaches include subsidies for organisationsengaged in particular activities, separatecommissioning for social outcomes, and theinclusion of ‘social clauses’ within contracts. TheOffice of the Third Sector is committed to exploringthe use of social clauses and seeking to lower thebarriers to their use.

130 Across national and local settings, commissioners arebest placed to decide how to factor broader socialbenefits into funding arrangements. However,in doing so, they face a number of barriers. Thecomplexity of social clauses and related approachesmakes them difficult for commissioners to tackle inisolation.

131 The Office of the Third Sector, in collaboration withthe North East RCE, will consult partners on how totackle barriers to the use of social clauses, forexample through the development of a smallnumber of template social clauses for key socialoutcomes as tools to enable and focus their use.The Office of the Third Sector will also work withthose commissioners pioneering the use of socialclauses to learn about their experiences and thecosts of social clauses, and to draw together leading practice.

132 In a number of sectors, examples exist where socialenterprises are now being considered as part of therange of partners in public service delivery. In therecycling sector, for example, where communityorganisations were often the early pioneers, socialenterprises are competing with other businesses forcontracts that in many cases enable them to deliveremployment outcomes alongside the recycling targets.

133 The Department for Environment, Food and RuralAffairs (Defra) will publish a revised waste strategyfor England before the end of 2006, which will setout policy on social enterprise and steps beingtaken to help it play a greater role in sustainablewaste management.

134 In the health and social care sectors, socialenterprises are already established operators,delivering, for example, primary care, promotion ofhealthy living, care for the elderly, and support forthose with mental health problems or those livingwith long-term conditions. Following publication ofthe White Paper Your Health, Your Care, Your Say,in January 2006, a Social Enterprise Unit was set upby the Department of Health to support thedevelopment of social enterprises in this area.

135 In particular, the Department of Health, workingwith the Office of the Third Sector, is: n supporting entry of social enterprises to provide

health and social care services in response tocommissioner requirements; and, in particular,stimulating the development of new forms ofprovision organised around patients’ and users’needs;



n leading a programme of pathfinder projects in2006/07 and 2007/08 to support a number ofthose wishing to set up social enterprise modelsfrom within the NHS and local authorities; andfrom within existing social enterprises and otherthird sector organisations who want to enter thehealth and social care market;

n setting up a social enterprise investment fund toprovide start-up support and investment forsocial enterprises in health and social care, anddeveloping a resource pack; and

n implementing with partners therecommendations of the Third SectorCommissioning Task Force in health andsocial care.

136 The Government will also take steps to makeit easier for social enterprises as well as otherbusinesses to find out about new contractingopportunities. Smaller enterprises have moreproblems than larger businesses in finding theresources to search for opportunities and getting onpreferred supplier lists. The government portalsupply2.gov.uk (case study 25) has been developedto consolidate access to opportunities from acrossthe whole of the public sector.

Case study 25

Supply2.gov.uk is ‘the first portal of call’ for alllower-value public sector contracts across thewhole spectrum of government. By enablinggovernment bodies to publicise their lower-valuecontracts, typically under £100,000, in one place,it provides all types of businesses, including socialenterprises, with access to information on centraland local government opportunities. This, in turn,will give public sector buyers more supplier choiceand access to potentially more innovative andbetter-value products and services.

The portal opened for business in March 2006 and,to reach the business community, it is alsoassociated (co-branded) with Business Link. So farover 13,000 tender opportunities have beenadvertised, with 26,000 suppliers and 2,800 buyersregistered on the portal. www.supply2.gov.uk,www.business.link.gov.uk

137 The Office of the Third Sector will work withpartners, including the Small Business Service, theOffice of Government Commerce and the RDAs, tomarket the supply2.gov.uk portal to socialenterprises.

Working in partnership – promotingopportunities

138 In several areas of public policy, the Government hasbegun to consider how social enterprises can workin partnership to achieve social and economicobjectives. In many cases this involves research intothe contribution different social enterprise modelscan make in different circumstances (case study 26).

Case study 26The role of social enterprise inenhancing the sustainability ofrural transport

The Community TransportAssociation (CTA) estimates that there are around700 community transport schemes serving ruralareas, and an increasing number of these areenterprise-based, meaning that over half of theirincome is derived from charges for services andcontracts, as opposed to grants and donations.

The Department for Transport (DfT) believes thatthere is considerable potential for communitytransport schemes to increase their financial stability,and thereby better achieve their social goals, byadopting a stronger enterprise-based focus.

DfT has undertaken research (with the CTA andthe Plunkett Foundation) into the use of socialenterprise to enhance the sustainability of ruraltransport. The research shows that there isconsiderable potential for community transportschemes to increase their financial stability byadopting a stronger enterprise-based focus, andhas identified best practice models to do this. The findings of this research were published onNational Social Enterprise Day on 16 November 2006.www.plunkett.co.ukwww.communitytransport.com

139 The London 2012 Olympic and Paralympic Gamespresent a unique opportunity for social enterpriseto work with Olympic partners to deliver theGames’ key objectives. The Olympic Board iscommitted to ensuring that a diverse range ofpartners across business and the communitycontribute to the delivery of the London 2012Olympic Games. This includes recognition of therole social enterprise could play in maximising theeconomic, social, health and environmentalbenefits of the Olympic Programme. To do this:

n The Office of the Third Sector has commissionedSocial Enterprise London to research theopportunities for social enterprises to contributeto the Olympic legacy. Some of the opportunitieswill come through the procurement of services;others may arise through the regeneration ofareas and community engagement (case study 27).

n The Olympic Delivery Authority is developing aprocurement policy which will seek to ensurethat competition for all public contracts is openand fair and provides the best possible value formoney, in terms not only of cost, but also of thesustainabillity requirements of the legacy.

n The London Development Agency, through aLondon Employment and Skills Taskforce for2012, will from April 2007 support a micro-business and social enterprise start-upprogramme as a means of using the Olympics toengage with the workless about employmentthrough enterprise and entrepreneurship.



Case study 27

Water City is a unique opportunity to reconnecteast Londoners with the docks, rivers and canals inthe Lower Lea Valley; to build bridges, bothphysical and human, across this fragmented areaand to create together a new place defined byenterprise rather than dependence.

The Water City proposals have grown out of thepioneering work in social enterprise of the Bromleyby Bow Centre and its partners (the Bromley byBow Centre is 200 yards from the new OlympicPark).

Water City is an important opportunity for publicsector bodies to build upon the work of aconsiderable network of business and socialentrepreneurs who have been building projectsand creating businesses and social enterprises overmany years in the Lower Lea Valley.

The 2012 Olympics are a catalyst which canstimulate opportunity to deliver a lasting legacy forthe communities of east London.www.watercity.org.uk

140 Elsewhere, research into the contribution of socialenterprise has resulted in practical innovation. TheDTI has explored using social enterprise models tohelp deliver its objectives on affordable energy (casestudy 28) and the DTI and the Home Office havebeen working together to identify and reviewenterprise provision aimed at both serving andformer offenders (case study 29).

141 Another area where the Government has exploredthe role of social enterprise is in the regeneration ofdeprived communities. Social enterprises can play arole by:n raising the profile and awareness of enterprise,

especially in disadvantaged areas and under-represented groups;

n creating business and employment opportunitiesin areas where traditional for-profit businessmodels may not operate or be viable;

n providing accessible learning and trainingopportunities for local people;

n leveraging in funding from other sources; andn helping to build social networks and contributing

to wider community cohesion.

Case study 28The DTI has used a social enterprise route indeveloping policy to address fuel poverty. As partof its work in support of the Energy White Paperobjectives, the DTI, with RDAs, established anot-for-profit parent company. This company willdeliver affordable energy solutions to 2,000 homesin deprived communities in the North East andYorkshire and the Humber RDA areas. Once initialarrangements governing the two programmeswere finalised, the not-for-profit status of theparent company converted to a community interestcompany and two regional subsidiary communityinterest companies were established. Defra’s WarmFront Scheme Manager, the Eaga Partnership, ahigh-profile social enterprise, is also active in thisarea being responsible for delivery of assistance tovulnerable households. www.eagagroup.com

Case study 29Askham Grange is a women’s open prison. It offerswork experience, both within and outside theprison, to prepare offenders for life after prison.Two specific areas are conferencing and hospitality,using facilities within the prison. During 2005, afeasibility study established that these services havethe potential to evolve into a thriving, self-sustaining business within the prison. The studyconcluded that social enterprise offered anappropriate business model. A business plan wasproduced, and a replicable model developed thatlays down the key principles for a market-ledenterprise. The business plan is now beingimplemented.

142 Research has shown that social enterprises in urbanareas tend to be situated in areas of highdeprivation, and a third of those are within the20 per cent most deprived wards.41 Defra’sEnterprise4Inclusion action research programmeillustrated the considerable interest from ruralcommunities in the use of social enterpriseapproaches as a way of meeting multiple communitygoals, including that of tackling social exclusion.42

The social enterprise approach can be effective inimproving access to services, and can also help totackle income and social deprivation.

143 Social enterprises that have developed out of SingleRegeneration Budget programmes show thepossibilities of using public funding to createorganisations that subsequently can becomesustainable and independent, generating incomefrom a variety of sources (case studies 30 and 31).The DCLG is keen to extend the potential of socialenterprises to contribute to sustainablecommunities.


41 IFF Research (2005) A Survey of Social Enterprises acrossthe UK. London: Small Business Service.

42 Part of Defra’s Rural Voluntary and Community Sectorand Social Inclusion Programme 2005/06 examining therole social enterprise can play in tackling social exclusionin a rural context.

Case study 30

Shoreditch Trust uses a social enterprise model toensure its succession strategy. The aim is to deliverrevenue streams to support ongoing servicesbeyond the New Deal for Communities’ 10-yearfunding programme. By forming partnerships withmarket leaders, it combines public and privatesector expertise. One such venture is theaward-winning Digital Bridge – teaming up with

partners including ITN andHomechoice to deliver theUK’s largest ICT-literatebroadband community.

Plans are in place to roll out the service across theUK. Another venture is the Shoreditch PropertyCompany. This social enterprise will leverage itsexisting property portfolio to grow its asset baseand income streams for the Trust beyond 2010.www.shoreditchtrust.org.ukwww.digitalbridge.co.ukwww.shoreditchpropertycompany.co.uk

Case study 31

Community Ventures Limited (CVL) started life in the1980s as City Challenge-funded East MiddlesbroughCommunity Ventures. It is now a successful socialenterprise, with an annual turnover of £1.3 million,employing 60 local people as well as operatingnationally. Its main business is delivering security

services commercially, and providing monitoring andsupply services for alarms and CCTV for the publicsector (Middlesbrough was the first local authority inthe UK to introduce public realm audio warning),domestic and retail locations; and lone workerprotection monitoring for vulnerable workers in thesocial sector. It runs a community safety alarmsinitiative. CVL also provides a systems andsustainability consultancy service to not-for-profitorganisations and operates a UK Online computercentre for local people to learn ICT skills and developsocial skills learning. Its main board includescommunity and business representation, and day-to-day operations are directed by a professionalmanagement board. Annual surpluses, currentlyaround £150,000, are reinvested for communitybenefit. Email [email protected]


144 One opportunity for promoting social enterprise inregeneration is through the Local Enterprise GrowthInitiative (LEGI), a joint HM Treasury, DCLG and DTIprogramme, which aims to boost local incomes,employment opportunities and business growththrough enterprise and investment.43 Each of the 10successful bids in the first round of LEGI, announcedin February 2006, demonstrated the contribution ofsocial enterprise within its programmes. Theysupported the growth of the sector, and includedtargets for formation of new or established socialenterprises to deliver wider LEGI objectives.

145 Drawing on experience of the first round, specificguidance was drawn up and distributed to all roundtwo bidders, suggesting how social enterprise couldbe actively promoted through LEGI proposals. Localauthorities, working with their partners in LocalStrategic Partnerships, are being encouraged toinclude action to promote social enterprise as partof the Local Area Agreements currently beingagreed with Government Offices.

146 The DCLG will work with the Office of the ThirdSector, Defra and the DTI to promote ways in whichmainstream regeneration funding can be used todevelop sustainable social enterprise solutions,using case studies of successful practice.

147 In addition to raising the levels of economic activity indeprived areas, the Government has an interest inhelping local groups to have more control over theirown communities and services. As a result, theGovernment has relaxed ‘clawback’ rules (definition 4)which deterred community groups from making bestuse of their assets. The DCLG has subsequentlypublished guidance on how the revised rules apply tothe programmes it sponsors. More widely, there is anongoing need to make sure that these changes to therules are fully understood and implemented.

148 The DCLG will publicise and promote ‘clawback’guidance to local authorities, detailing the extent towhich a funding body should retain an interest in atransferred asset.

149 In some situations taking ownership of assets thatwere previously owned by the public sector hasenabled community-based social enterprises to makea greater contribution to the regeneration of localareas. The DCLG and the Office of the Third Sectorhave been considering ways in which to facilitate anincrease in community management and ownershipof assets, particularly where they are in publicownership, while having appropriate regard for thepotential risks and costs that may be involved.44

Definition 4: What is clawback?Clawback is a common way of ensuring that moniespaid as grant are used with regularity and propriety.A condition is set on the grant that gives thefunding body a charge over the asset. Suchconditions can include the funder receiving apercentage of proceeds from the commercial use ofthe asset, or a full refund should the asset be sold.


43 www.neighbourhoodrenewal.gov.uk/page.asp?id=169644This builds on DCLG (2005) Citizen Engagement andPublic Services:Why Neighbourhoods Matter.

150 In order to build on the work already undertaken,the DCLG has commissioned an independent review,chaired by Barry Quirk, Chief Executive of LewishamBorough Council. Reporting in spring 2007, it willlook further at the barriers to communitymanagement and ownership of public assets. Thereview will examine existing powers and policies andconsider how these powers can be better used, whatunnecessary barriers remain, and where furtherpowers and policy changes may be required toovercome them. The review will produce an actionplan setting out workable proposals for earlyimplementation. In the meantime, the Governmentwill continue to provide support for third sectororganisations wanting to take on the ownership oflocal assets. As announced in the Local GovernmentWhite Paper, the Office of the Third Sector willestablish a fund to help provide capital support torefurbish buildings that local authorities wish totransfer to community organisations.

151 More broadly, more needs to be done to assess therole social enterprises might play in helping to meetbig challenges such as climate change, globalisationand the aging population. These themes are thesubject of the 2007 Comprehensive SpendingReview, and consultations are under way to establishhow best to maximise the third sector’s ability towork with the Government to address these issues.

Enabling the sector to make its voice clear

152 In 2002, to address the lack of a coherent,representative voice for social enterprises, theGovernment supported the establishment of theSocial Enterprise Coalition by providing funding forits first three years. This brought together the rangeof existing umbrella bodies operating in the sector.

153 Since it was set up, the Social Enterprise Coalitionhas developed its membership base, and, throughpublications and events, has increased the amountof money it earns in fees and contract income. Therole of the Social Enterprise Coalition and itsmembers in contributing to policy development is ofbenefit not only to its members, who contribute tothe cost, but also to government.

154 In summer 2005 the Government invitedapplications from organisations and partnershipsthat wished to represent the voluntary andcommunity sector at national level. Since then theOffice of the Third Sector has entered into strategicfunding arrangements with those that mosteffectively demonstrated the ability to fill this role.Existing strategic partners include some of themembers of the Social Enterprise Coalition,including the Development Trusts Association andthe Community Action Network.

155 Responsibility for this strategic funding programmenow lies within the Office of the Third Sector. TheOffice of the Third Sector will now extend thisprogramme to provide three-year strategic supportto a wider range of organisations that representsocial enterprises at a national level. The Office ofthe Third Sector will invite organisations to bid foran additional £0.8 million per year for three years,in order to help them to work with government toraise the profile of social enterprise and influencepolicy. This will give the sector the opportunity toreaffirm its high-level representative structurethrough the Social Enterprise Coalition, as well asproviding opportunity for a limited number of other,national partners, where the need can bedemonstrated.


156 This funding will increase the ability of socialenterprises to make their voices heard through theorganisations that represent them. It puts the onuson these organisations to collect and presentevidence about their members’ experiences and tosuggest how public policy objectives could be bettermet through social enterprise, or how changes toregulation or policy frameworks might affect theability of social enterprise to deliver social outcomes.

157 In turn, the Government will ensure thatorganisations representing social enterprise have fullaccess to policy makers. The Office of the ThirdSector, established in May 2006, is well placed,through its central positioning in the Cabinet Office,to raise awareness of social enterprise among otherdepartments.


This action plan is part of an ongoing process in arapidly evolving sector. We welcome the input andsuggestions of any interested parties, by email [email protected], or bypost at Social Enterprise Unit, Office of the ThirdSector, Cabinet Office, 35 Great Smith Street,London SW1P 3BQ.

158 The strategy spans government. The Office of theThird Sector in the Cabinet Office is responsible forpolicy relating to social enterprise, but oftenindividual actions fall to other parts of governmentat central, regional or local levels.

159 The Office of the Third Sector will ensure that itworks with other parts of government, its strategicsocial enterprise partners, social enterpriseambassadors and others in the sector, both todeliver the actions outlined here and to ensure thatthere is regular sharing of information betweengovernment and the sector.

160 The four themes outlined in this document containstrands of work to move forward towards the visionof dynamic and sustainable social enterprises,contributing to a stronger economy and a fairersociety. Each has a performance indicator (figure 2).


Ensuring delivery

VisionDynamic and sustainable social enterprises,

contributing to a stronger economy and a fairer society

Trend indicatorAn upward trend in the number of businesses that fit the Government’s definition of

social enterpriseSource: Annual Small Business Survey weighted for size profile of social enterprise population

Fostering a culture ofsocial enterprise

Ensuring that the right information and advice are

available

Enabling access to appropriate finance

Enabling social enterprisesto work with government

Performance indicator

Levels of involvementin social enterprise

through employmentand awareness

Source: DTI HouseholdSurvey


Measurement of penetration and

satisfaction rates forsocial enterprises using

Business Link

Source: RDAs


Comparison of socialenterprises’ access tofinance with matchedsamples of commercial

businesses

Source: Additions to theDTI’s survey on small

business finance


Assessment of social enterprises/third sector

organisations’ experienceof governmentprocurement

Source: Office of the ThirdSector (OTS will consult on

the most appropriatemeasure)

StrategyEncourage growth in social enterprise in four ways:

Figure 2: Performance indicators

161 The performance indicators are drawn, wherepossible, from mainstream business surveys, makinguse of new social enterprise questions added forthe first time in 2005 fieldwork. For example, theAnnual Small Business Survey will provide anongoing national estimate of the scale of socialenterprise, and the biennial Household Survey willprovide ongoing information about the motivationof potential entrepreneurs and awareness of socialenterprise.

162 Regular progress reports on the activities outlined inthis action plan will be made available on theCabinet Office website:www.cabinetoffice.gov.uk/thirdsector


Annex 1: Working group membership 65

The action plan has been produced with help andinput from a working group drawn fromgovernment departments, regional developmentagencies, the Social Enterprise Coalition and othersin the sector or with a strong interest in socialenterprise. Other bodies, including the devolvedadministrations and the Northern IrelandAdministration, have also contributed.

Name OrganisationHilary Norman Office of the Third Sector,

Social Enterprise UnitAdele Blakebrough Community Action NetworkAndrew Robinson RBS NatWestClaire Glossop National Council for Voluntary

OrganisationsHelen Seymour Co-operatives UKJonathan Bland Social Enterprise CoalitionSally Reynolds Social Firms UKSteve Wyler Development Trusts

AssociationLucy Findlay RISEStephen Sears ECT GroupMark Sesnan Greenwich Leisure Ltd

(representing the Sport andLeisure Trusts Association)

Name OrganisationRowena Young Saïd Business SchoolRichard Moreton Plunkett FoundationRosa Wilkinson Small Business ServiceKathryn Packer/ Department for Environment,Holly Yates Food and Rural AffairsSally Collier Office of Government

CommerceColin Jones/ Department for CommunitiesSarfraz Shafiq and Local GovernmentJanet Moore Department for Education and

SkillsAlice Galvin HM TreasuryRichard Clarke Office of the Third SectorKate Annison South East England

Development Agency

Annex 1: Working group membership


All regions and nations of the UK have developedclear approaches to social enterprise over the pastfew years. The following pages provide an overviewof the approach taken in the English regions and inNorthern Ireland, Scotland and Wales.

English regional development agenciesEngland’s regional development agencies (RDAs)were established in 1999 to drive forwardsustainable economic growth across the nine Englishregions. They have a strategic leadership role insupporting regional economic development viacatalytic interventions and investment.

Each RDA receives proportionate funding fromcentral government based on the Single Programme(also known as the Single Pot) funding formula. TheSingle Programme formula is based on a mix ofweighted factors relating to relative deprivation andeconomic activity within each region.

Each RDA is responsible for leading thedevelopment of a Regional Economic Strategy (RES)which is specific to the economic needs of thatregion. The RES is the strategic document whichoutlines the focus of intervention to promote

economic development for a range of public, privateand third sector partners. Each RDA also prepares aCorporate Plan in line with the RDA NationalTasking Framework. RDA Corporate Plans set outhow the RDA’s regional, economic and strategicpriorities for investment and support will contributeto the delivery of the RES.

The RDAs are also responsible for the managementof a number of distinct programmes devolved fromthe national to the regional level. In April 2005, theRDAs were given the responsibility for the regionalmanagement of the Business Link Network. BusinessLink is the primary publicly funded gateway tobusiness support in the UK. Business Link, under theoversight of the RDAs, operates an information,diagnosis and brokerage approach to accessingbusiness support for SMEs in the UK. The RDAs arecommitted to make business support through theinformation, diagnostic and brokerage modelappropriate to all SMEs in England, including socialenterprises.

RDA social enterprise policyThe principle of devolution of funding to the RDAsis based on the rationale that regions are bestplaced to determine the interventions required atthe local level to support the principles ofsustainable economic growth.

Strategically, RDAs recognise the potential thatsocial enterprise has for the delivery of a number ofkey objectives of regional sustainable economicdevelopment, including:n increased productivity through innovation and

economic inclusion;n maximising the impact of the public pound

through public service delivery models thatsupport added economic, social andenvironmental value; and

n modelling sustainable economic growth.

The RDAs recognise that social enterprise is at hearta business model and that, as with all businesses,intervention is best targeted at releasing socialenterprises to compete in the market through twokey approaches:n identifying markets; andn removing barriers to operation.

Annex 2: English regional development agencies anddevolved administrations

Annex 2: English regional development agencies and devolved administrations 67

Over the last three years the nine RDAs in Englandhave supported social enterprise across the regionsto achieve these two aims through a range ofactivities including:n support for specialist infrastructure;n demonstration projects of regional and national

significance to key models and markets;n understanding and awareness raising

programmes;n development of specialist advice and financial

products where appropriate;n policy intervention within public sector markets;

andn developing professional development training

and education.

While each RDA has specific priorities, nationallythe continued investment in and support to socialenterprise across England via RDAs will be based onthe following key policy principles: n removing barriers to competing on a level

playing field with other businesses;n prioritising support where historical or potential

economic impact can be evidenced;n working within sustainable markets;

n prioritising efficient infrastructure and supportmechanisms that have sustainable businessmodels, based, where appropriate, on economiesof scale; and

n mainstreaming access to business support.

If you would like further information about thework of the RDAs nationally or individually pleasevisit the RDA National Secretariat website: www.englandsrdas.com/home.aspx.

RDA actionsFostering a culture where there is full information

about the potential of social enterprise

RDAs will: n promote commercial collaboration between

social enterprises and the private sector by arange of mechanisms including procurement;

n encourage large firms and SMEs to delivercorporate social responsibility objectives throughpartnership with social enterprises; and

n include social enterprises in new and existingnetworks to encourage interconnections withother business models in relevant sectors andclusters.

RDAs will encourage new entrants through greaterfocus on social enterprise by the following:n embedding social enterprise in existing

entrepreneurship and leadership programmes;n influencing key partners and stakeholders (for

example higher education institutions, careersadvisers, Jobcentre Plus, Learning and SkillsCouncils, Sector Skills Councils and economicdevelopment organisations) to ensure that theyare able to offer appropriate advice to potentialsocial enterprises in pre-start or start-up stages;and

n promoting sustainable models of infrastructureand intermediary support for potential newentrants to social enterprise.

RDAs will work with sector bodies to:n help disseminate potential transferable social

enterprise models and good practice;n promote opportunities to replicate/adapt existing

business models, including through events,workshops etc; and

n promote the idea that the sector should do moreto market and publicise its own achievements.


Ensuring that the right information and advice are

available to those running social enterprises

Following the joint project to review currentbusiness support arrangements for social enterpriseacross all regions, and capture good practice, a planfor implementation of good practice across all RDAswill be in place by March 2007.

RDAs will support delivery of the overall socialenterprise strategy in their regions. In particular,through the Business Link service, they willimplement, market and monitor the supply ofappropriate business support accessible to socialenterprises – taking account of customer feedback.

RDAs will ensure that Business Link is aware ofspecialist business support available for socialenterprise in their region, by:n ensuring that lessons learnt from the review of

current practice are built on in implementing theBusiness Link model of support; and

n reflecting feedback from social enterprises thathave used the Business Link service.

By 2008 RDAs should be able to report increasedsatisfaction with business support in their regions.

RDAs will support skills development byencouraging the inclusion of social enterprises inregional skills development networks and activitiesand by ensuring social enterprise is included in Trainto Gain (formerly the National Employer TrainingProgramme).

Enabling social enterprises to access appropriate

finance

RDAs will:n consider the accessibility of existing investment

mechanisms already administered by them; n encourage better investment readiness and

access to mainstream finance throughembedding social enterprise into existing andfuture ‘access to finance’ programmes; and

n review existing investment in social enterprise viaCommunity Development Finance Institutionsand consider dissemination of good practicemodels.

Enabling social enterprises to work with government

The DTI and RDAs will work to promote fair accessto public sector markets for SMEs, ensuring thatsocial enterprises are eligible for procurement

capability support targeted at more traditional smalland medium-sized businesses.

They will do this in particular by:n marketing the Small Business Service’s ‘Supplier

Route to Government’ to social enterprise;n building on DTI research on the costs and

benefits of using social clauses in publicprocurement; and

n providing access for social enterprise to RDAs’wider support for SMEs on procurement as partof their supply chain development programmes.


Northern IrelandIn 2002, the Department of Enterprise, Trade andInvestment (DETI) took the lead in integrating andco-ordinating the social economy sector’sdevelopment across government departments. DETIalso led on the preparation and publication in 2004of the three-year cross-departmental strategy2004–07, Developing a Successful Social Economy,with annual action plans. The sector continues to bea priority and has been identified as an area foraction within DETI’s 2005–08 corporate plan.

The overall aim of the strategy is to support thedevelopment of a strong and sustainable socialeconomy, through the following three key objectives: n increase awareness of the sector and establish its

value and contribution to the local economy;n develop the sector and increase its business

strengths; and n create a supportive and enabling environment.

The focus in the final year of the current strategy(2006/07) includes actions in the following areas: n Social Economy Network: the transition of the

Social Economy Network to an incorporatedentity with its own strategy. DETI will be working

closely with the new board of the Social EconomyNetwork to support and facilitate the movetowards a more independent and sustainablenetwork with a focus on advocacy andleadership, membership development andprofessionally managed services to members.

n Mapping the size and scale of the sector: the firstbiennial survey of the sector in Northern Irelandwill be undertaken by DETI – questionnairesissued in September 2006 and results available inearly 2007.

n Awareness raising: as part of the communicationsstrategy, a further set of eight case studies havebeen developed and distributed to showcase therange of activities and strengths of the sector andas learning tools for the sector (for furtherinformation on the case studies, see the DETIwebsite www.detini.gov.uk).

n Procurement: the development of a pilotprogramme to build the capacity and capabilityof the sector to identify possible procurementopportunities and to tender and compete moresuccessfully for public sector contracts.

n Review of the Northern Ireland strategy: thecurrent three-year strategy is being reviewed to

assess its impact and to identify furtheropportunities to work both across governmentdepartments and with the Social EconomyNetwork, to ensure that the social economycontinues to make a significant contribution tosocial and economic development in NorthernIreland.

ScotlandThe Scottish Executive strategy for the socialeconomy is being implemented through theFuturebuilders Scotland Programme, which isproviding £17 million of direct investment into socialeconomy organisations supplemented by a£1 million support programme. In May 2005 theScottish Executive committed itself to developing astrategy specifically for social enterprise, andproduction of this is now under way. The strategywill link to Scottish Executive commitments todeliver better public services and grow Scotland’seconomy, and build on the work already begunthrough Futurebuilders Scotland.


Currently, the support programme forFuturebuilders Scotland is providing assistance tothe sector in four main areas:n producing a series of guides aimed at levelling

the playing field for social economy organisationsin the public procurement process;

n investigating the development of new financialproducts for the sector;

n ensuring access to development support for thesector, including through the establishment ofLocal Social Economy Partnerships; and

n undertaking research to gain more intelligenceon the sector.

Other support for the sector includes:n The Exchange, which provides three levels of

assistance to social economy organisations: aweb-based database of available support, apersonal (telephone) response service, and activeaccounts matching specialist support direct toorganisations;

n Social Equity Scotland, which is being developedand piloted to provide equity-type and patientcapital-type financial products for socialenterprises; and

n the Scottish Social Enterprise Academy, which hasbeen established through funding from theFuturebuilders Scotland Learning Fund to providetraining courses tailored for social enterprises,focusing mainly on strategic development andbusiness planning.

Additionally, there are three Futurebuilders Scotlandfunds providing direct financial assistance to thesector:n a £12 million Investment Fund making grants of

up to £500,000 to established social economyorganisations with a track record of successfulservice delivery;

n a £4 million Seedcorn Fund making grants of upto £50,000 to smaller, growing organisations thatwant to develop a new trading idea or expandinto new areas; and

n a £1 million Learning Fund awarding grants of upto £20,000 per organisation and developing newtraining opportunities.

All grants made from these funds must meetScottish Executive Closing the Opportunity Gapobjectives while also contributing to the recipientorganisations’ financial sustainability.

WalesThe Welsh Assembly Government’s vision is ofdynamic and sustainable social enterprisesstrengthening an inclusive and growing economy.This is consistent with the vision in the WelshAssembly Government’s main strategic document,Wales, A Better Country, of a ‘sustainable future forWales where actions for social, economic andenvironmental improvement work together tocreate positive change’.

A consultation document on the social enterpriseaction plan was issued in July 2003. The WelshAssembly Government’s response to the consultationwas produced in March 2004. The first socialenterprise strategy for Wales, launched in June2005, builds on this earlier work and has beendeveloped in partnership with the Social EnterpriseJoint Working Group which includes socialenterprise practitioners, members of representativebodies, officials from the Welsh AssemblyGovernment and representatives from the voluntarysector.

Following the format of the social enterprise actionplan, the strategy focuses on the four mainobjectives of:n creating an enabling environment;n making social enterprises better businesses;n establishing the value of social enterprises; andn encouraging the development of new

opportunities.

The strategy provides details on the barriers toachieving each of these objectives, information onsome of the measures that will be put in place toovercome these barriers, and a synopsis of work thatis already under way.

The strategy also incorporates a number of keyactions and targets, and information on how thesewill be monitored and evaluated. In connection withthese key actions, sub-groups of the SocialEnterprise Joint Working Group are undertakingwork during 2006 in the areas of access to finance,procurement and asset development.

Annual reviews will be carried out over the life ofthe strategy.


Office of the Third SectorCabinet Office35 Great Smith StreetLondon SW1P 3BQ

Email: [email protected]: www.cabinetoffice.gov.uk/thirdsectorPublication date: November 2006

© Crown copyright 2006

The text in this document may be reproduced free of charge in any format or media without requiringspecific permission. This is subject to the material not being used in a derogatory manner or in amisleading context. The source of the material must be acknowledged as Crown copyright and the titleof the document must be included when reproduced as part of another publication or service. Thematerial used in this publication is constituted from 75% post consumer waste and 25% virgin fibre.

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