LONDON (Thomson Reuters Foundation) – A new alliance has been formed in Britain to push for a “social economy” built around social enterprises and co-operatives in the run-up to the next general election in 2015.
The Social Economy Alliance aims to provide an antidote to a UK economy in the throes of severe public spending cuts and dominated by a corporate philosophy driven by profit, with leading companies having come under fire for avoiding tax.
The alliance says it will press mainstream political parties to make an economy focused on social values a key element in their election manifestos.
Peter Holbrook, chief executive of Social Enterprise UK, said “a shift in the plates of the UK economy” has happened in the last 10 years.
"The last decade has seen huge progress in the social sector in the UK,” he told the launch of the alliance on Tuesday. “Social enterprises and co-operatives are outperforming just-for-profit businesses; alternative banks have better returns on assets, lower volatility and higher growth; and a growing proportion of start-ups are socially-driven."
The alliance already has 15 members, including Social Enterprise UK, Co-operatives UK, UnLtd, The Social Investment Forum, The Young Foundation and the School for Social Entrepreneurs among others. It has backing from ministers, lawmakers, think tanks and charities, and plans to develop policy ideas and raise awareness through to polling day in May 2015.
A GROWING SECTOR
Amid criticism that large companies such as Google, Amazon and Starbucks have been using elaborate schemes to avoid paying tax, recognition of social enterprise as a different way of doing business is growing.
“We must not allow the narrative about what’s ‘good for the economy’ to be dominated by those who want to stimulate demand for luxury goods with heavy social and environmental costs; or the interests of some very large companies that concentrate wealth in the hands of a few shareholders while paying as little tax as possible; or on pumping money into a handful of banks,” said Holbrook.
Prime Minister David Cameron said in a speech at a summit of the G8 leading economies that “social enterprises…have the knowledge, human touch and personal commitment to succeed where governments often fail”.
Chi Onwurah, the opposition Labour Party’s Cabinet Office spokeswoman, said traditional business models based on maximising profits had proved to be an inefficient way to deliver social value.
“We’re now in a position where we have outsourced a lot of our public sector, not to the communities or to the service users, but to large companies which are just as remote as the state…whilst we have social enterprises which are rooted in their communities, then that is a bad outcome,” she said.
There are now close to 180,000 social enterprises in Britain, representing 15 percent of small and medium-sized companies. Almost three quarters of them actively involve their beneficiaries in business decisions, according to Social Enterprise UK.
Almost 40 percent work in Britain’s most deprived communities, compared to 13 percent of conventional businesses.
Here are some recent developments in UK social economy policy:
- The first anniversary of the world’s first social investment bank, Big Society Capital, which is funded from dormant bank accounts
- The Public Services (Social Value) Act was implemented in 2013 and is spawning similar draft legislation around the world. It is designed to maximise the social value gained from public spending
- The world's first legal form for social enterprises. Community Interest Companies are legally bound to use their profits and assets for public good
- Tax relief plans for social investment currently being developed by the Treasury
- The world's first social impact bond launched by the UK government with money from investors to reduce re-offending rates among inmates at Peterborough prison, with 12 others now in place too.
For news about the social economy, follow #socialeconomy on Twitter.