Report of the Strategic Director of Housing and Planning s1

Part 1

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REPORT OF THE STRATEGIC DIRECTOR OF HOUSING AND PLANNING ______

TO THE LEAD MEMBER FOR HOUSING ON 18th January 2007 ______

TITLE: Briefing Report on Social Enterprise ______

RECOMMENDATIONS: That Lead Member notes the emerging priority being given by central government to Social Enterprise and the Third Sector in general and the next steps which Housing is planning to take. ______

EXECUTIVE SUMMARY:

The purpose of this briefing is to describe the growing importance of social enterprise, the drivers and principles behind this and its implications and opportunities for Housing Services in Salford.

A very clear agenda has emerged from central government over the last 6 months, which has seen several of the most prominent government departments promoting the third sector, and social enterprise in particular, as a ‘key plank of reform’.

In Salford we contract with many social enterprises already, but can do more to increase participation through contracts and investment, which will release more back into our community because social enterprises have a local, community, environmental and social purpose.

The paper identifies next steps that can be taken to benchmark current activity and promote increased future engagement with social enterprise through procurement and investment strategy.

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BACKGROUND DOCUMENTS:

Social Enterprise Action Plan: Scaling new heights (Cabinet Office 2006) 2002 Government strategy, Social Enterprise, a strategy for success (DTI 2002).

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ASSESSMENT OF RISK:

1 LM Briefing Projects Team May 06 Low – basic recommendations are made as part of the report which, if followed, will mitigate the risk of not engaging with social enterprise. ______

SOURCE OF FUNDING:

Not at this time – for information only

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LEGAL IMPLICATIONS:

Local Government White Paper makes recommendations to increase use of social enterprise through contracts. Legal and procurement implications of this will be addressed by engaging relevant departments at the time of contracting. ______

FINANCIAL IMPLICATIONS;

COMMUNICATION IMPLICATIONS:

This briefing has been made to Lead Member and Senior Managers of Housing have been copied in. An article in Houseplan Brief will be planned for the new year to raise awareness in all staff.

VALUE FOR MONEY IMPLICATIONS:

Increased value for money can be gained by increased engagement with social enterprise through releasing the power of their social, community, environmental and/or health principles.

CLIENT IMPLICATIONS:

PROPERTY:

2 LM Briefing Projects Team May 06 ______

HUMAN RESOURCES:

We are seeking to brief a Housing Manager to take the basic recommendations forward, their feedback will determine need for increased or changed capacity to monitor or develop social enterprise further with Housing.

CONTACT OFFICER:

Clare Ibbeson – Projects Team Manager 0161 922 8710 ______

WARD(S) TO WHICH REPORT RELATE(S):

All Wards ______

KEY COUNCIL POLICIES:

Corporate Procurement Policy Supporting People Strategy ______

DETAILS:

1. Social Enterprise – an emerging theme

1.1. Social Enterprises are businesses with a social purpose that work with the aim of delivering social or environmental change rather than maximising the profit of shareholders. Many social enterprises are set up by local people for local people.

1.2. They are often referred to as having a triple bottom line, because as well as delivering the usual bottom line of profit, social and environmental outcomes are added to the equation (a quadruple bottom line would include health outcomes).

1.3. There are more than 55,000 social enterprises in the UK, generating more than 27 billion pounds turnover and contributing more than 8 billion pounds to GDP a year, principally reinvesting surpluses in the business or community.

1.4. It is estimated that while the profits from a profit-only business may be re-invested two or three times in the community in which it operates, income generated through social enterprise may be re-invested up to 7 or 8 times through local employment, local supply chain etc.

3 LM Briefing Projects Team May 06 1.5. A very clear agenda has emerged from central government over the last 6 months, which has seen several of the most prominent government departments promoting the third sector, and social enterprise in particular, as a ‘key plank of reform’.

1.6. The Department for Communities and Local Government summarises the aim of the White Paper: Strong and Prosperous Communities as “to give local people and local communities more influence and power to improve their lives”.

1.7. This growing recognition that people want increased influence over the services they receive has prompted DCLG to seek to increase community ownership and management of local facilities and assets, take opportunities to manage services at the neighbourhood level and there is discussion about whether to give councillors small budgets to tackle local issues.

1.8. Partners such as local third sector organisations can play a huge part in building this vision.

1.9. The theme of the agenda continues through the drive to improve the quality and content of Local Area Agreements.

1.10. Information emerging about the new Supporting People Strategy will have, as an emphasis, delivery by the third sector, which includes more broadly the voluntary and community sectors as well as social enterprise.

1.11. The agenda is also apparent in the DoH White Paper: Our Health Our Care Our Say and Ruth Kelly is keen to ‘unleash the potential’ of social enterprise into the NHS.

1.12. Recurrent themes are devolution and decentralisation, increasing involvement with communities and matching quality service delivery to specific, highly localised need.

1.13. The Office of the Third Sector, in the Cabinet Office, has been created to co-ordinate a social enterprise action plan, supported by £18m of funding, across government departments and Regional Development Agencies, working with Business Link to improve capacity.

1.14. Gordon Brown gave his personal support to the launch of the Government's Social Enterprise Action Plan: Scaling new heights (Cabinet Office 2006) on November 16th 20061. The White Paper refers to the plan as a framework to strengthen the role of the third sector in the delivery of local public services and to place them on a level playing field.

1 The Action Plan builds on the first 2002 Government strategy, Social Enterprise, a strategy for success (DTI 2002).

4 LM Briefing Projects Team May 06 1.15. HM Treasury and the Office of the Third Sector are currently engaged in a review of the third sector’s effect in social and economic regeneration, to feed into the Comprehensive Spending Review 2007. They will shortly set up a review with the Small Business Service and HM Revenue and Customs, to explore how operation of the Community Investment Tax Relief and other incentives might be improved to the benefit of social enterprise, reporting progress in Budget 2007.

1.16. Further advancement of the agenda has come in the guise of a legal form for social enterprises, available since 2005. Community Interest Companies will report to an independent regulator on how they are delivering for the community and how they are involving their stakeholders in their activities.

1.17. In summary;  Social Enterprise has many benefits at the local level  They are being promoted as a result of the DCLG White Paper  A Social Enterprise Action Plan has been produced  Legal and financial frameworks are being modified or created to support them

2. Social Enterprise – the plan

2.1. Local authority engagement with social enterprise is being promoted by government because their basic principles are ‘in sync’ with the public sector (triple/quadruple bottom line). Further information about the principles of Social Enterprise can be found at Appendix 1.

2.2. Social Enterprises can find getting access to funding or winning contracts difficult because their remit is often on a smaller scale and they do not attract the shareholders of a profit-only business, including bank investment.

2.3. The government’s action plan will drive change in these four areas to tackle the inequalities:  embedding the cultural change that is already underway, especially through inspiring the next generation to start thinking about the social impact of business;  improving advice and support available to start–up and growing social enterprises;  tackling the barriers in access to finance that restrict the growth of social enterprises;  enabling social enterprises to work effectively with government in pursuit of common goals.

3. Social Enterprise – What are we doing in Salford

5 LM Briefing Projects Team May 06 3.1. In turn, local authorities like Salford have clear benefits to achieve from supporting local social enterprise and so we should aim to match government objectives to raise awareness of what social enterprise can achieve and encourage more people to make a difference, either by involvement or investment.

3.2. Incentives towards this aim have been indicated, for example Ruth Kelly has proposed rewards for local authorities that promote local business growth.

3.3. The Salford Agreement itself includes targets promoting new business start-ups (including the number in ethnic groups).

3.4. Salford CC (with Manchester CC) have submitted a LEGI (Local Enterprise Growth Initiative) bid, the outcome of which will be announced in December or January.

4. Social Enterprise – a future in Salford with Housing Services

4.1. It would be accordant with the agenda to start to identify Housing Service’s current involvement with social enterprises and to commence actions to improve relationships and build opportunities for increased social enterprise in Salford.

4.2. We have current relationships and opportunities through contracts with Supporting People, regeneration initiatives, and other contracts covering every aspect of Housing. We will inevitably hold contracts with social enterprise and not be aware of their business premise, so starting to map our social enterprise engagement would give us the comparative information we need to benchmark our level of involvement.

4.3. It would then be proactive to network currently known social enterprise to a range of support mechanisms including those provided within the council, e.g. Economic Development, and to network them with other social enterprise to boost their effectiveness. We can also begin to work more closely with 3rd Sector Enterprises (Business Link), the national support agency for social enterprise, so they can prepare their clients fully to engage with Housing at the level we require.

4.4. We then need to ensure that procurement changes in line with government requirements to tackle the barriers facing social enterprise.

4.5. Supporting People Procurement Strategy and Housing Services Procurement Strategy, which are in the process of being developed at present, should specify a preference for business where it maintains a triple/quadruple bottom-line. This would result in major

6 LM Briefing Projects Team May 06 benefit, even if no social enterprise were procured, as mainstream business may change its approach in order to secure contracts.

4.6. Publicity about the forthcoming Supporting People Strategy draws attention to the two-thirds of SP services that are currently delivered through voluntary, community or social enterprise bodies that bring expertise, understanding of the community and innovation in the way services are delivered. DCLG are considering a standard commissioning framework and extra funding for SP services to recognise this input. The emerging procurement strategies therefore need to reflect this smarter approach to commissioning to take advantage of the benefits of social enterprise.

4.7. Housing also needs to start to perceive itself as an investor not just a procurer. This could involve setting up local pilots and providing grant funding to get small initiatives off the ground. These are more likely to engage social enterprise and allow social enterprise to do what it does best by meeting local need.

4.8. When working with local communities, we can seek out people who believe services are missing in their area and identify the type of service that will support regeneration and thriving communities. But we need to be aware of the difference between social enterprise and community enterprise and not expect very small organisations to grow into thriving social businesses. And throughout we need to take care not to encourage local citizens to start businesses if they are not totally supported. More than half of all new businesses fail every year.

4.9. During pilot phases or through small grant work, small social enterprise should be supported to better understand public sector requirements. If a pilot works then they will be in a better position to procure through the regular tendering process and the business has an opportunity to become better established, giving it greater resources to complete tenders.

4.10. Where grant funding is offered it should be made with a sustainable future in mind and only where it is anticipated that a future contract may be awarded, as reliance on grant funding creates uncertainty in the third sector. The Supporting People programme has recently moved to a two-year funding cycle, with intention to move to three, in recognition of this need for predictability of funding among its large proportion of third sector provision.

4.11. One of the government’s key aims is to secure stable funding for the sector. In times of uncertainty, small businesses can fail to secure qualified staff or can go out of business, creating discontinuity for local service. In the same situation, larger business can redeploy or maintain a core business. Therefore it is essential that social enterprise is offered sustainable contracts.

7 LM Briefing Projects Team May 06 4.12. Contracts, rather than grants, match the spirit of enterprise and business by which most social enterprise start-up and provide them with longer term futures, as most contracts for service are awarded for at least 3 years.

4.13. The framework must of course take account of the need to be efficient with public money, in fact this will help to release funds to support some of the more localised, innovative work that takes place, especially around Supporting People services. This only means that Housing needs to build on the approach to contracts fostered through the Egan-style partnering arrangements, to see outcome measurement and added value as off-setting the cost of services, to reveal that local social enterprise is more efficient because it provides more outcomes than organisations with merely the need to maximise profit.

4.14. And we should work with our regeneration partners to encourage them to engage with social enterprise too, thereby multiplying the effect of social cohesion and social ownership through local people working together to run projects.

4.15. Whether you are looking at Social Enterprise as start – ups, franchises, or as growth from public sector, it will only be feasible with the assistance of Economic Development for small business support. Housing needs to make better links with this directorate

4.16. Ultimately, social enterprise and the third sector is anticipated to provide the business backbone of local people’s services within the vision set out by government in the White Paper. Social enterprise empowers local people at a local level to meet their own needs and if we can be one small part of training a core of local people in enterprise development, they can cascade this knowledge by getting them to run core social enterprises which will spawn further enterprise.

4.17. The Council, as the commissioner, will always retain responsibility for ensuring good quality services, but the prize is local community ending its dependency on external agencies and becoming creative to solve their own issues.

5. Social Enterprise - measuring the success

5.1. The Social Enterprise Action Plan describes the following as measures of success: if the numbers of social enterprises increase2; if more people are aware of social enterprise3, and if social enterprises report fewer barriers to growth. If Housing commences work by

2 as measured by the Annual Small Business Survey 3 as measured by the Small Business Service Household Survey

8 LM Briefing Projects Team May 06 benchmarking where social enterprise is active in current contracts, if we improve links and support mechanisms for social enterprise, then if progressive measures are undertaken as outlined above, successful outcomes should be measurable at a local level

6. Next Steps

6.1. These are the next steps which can be taken within Housing current capacity to capture and develop this emerging theme.

 That this paper be taken to all commissioning bodies in Housing for them to consider against their own procurement activities.  An officer be identified and tasked with developing these issues further. A suggestion is the Principal Officer Added Value from within the Commissioning & Projects Team.  Salford CC (with Manchester CC) have submitted a LEGI (Local Enterprise Growth Initiative) bid, the outcome of which will be announced in December or January. It is suggested that senior Managers in Housing need to be identifying what links Housing can make to get the most out of LEGI support for local enterprise.

9 LM Briefing Projects Team May 06 Appendix 1

The Principles of Social Enterprise – An Overview

1.1. Social enterprises require special attention because they can often provide added value, especially but not solely because they are provided by local people for local people, supporting the ambition of the White Paper to increase community involvement.

6.2. They can bind communities together in pursuit of common aims and create opportunities for people of different backgrounds to work together for shared goals. They can also reach groups at grassroots level whose voice is critical to the debate – such as women and young people.

1.2. They could be especially relevant to young people as social enterprise makes a valuable contribution to business start-up; those not attracted to conventional business may find social enterprise matches their aspirations for social change. In recognition of this, the Action Plan has many measures specifically aimed at younger people.

1.3. Many examples of social enterprise increase local cohesion by using the strength of a sustainable business to meet social need and regenerate deprived communities. Increased ownership by the local community has been found to lower the crime-rate – a powerful indicator that Housing regeneration should be involved with social enterprise to increase chance of regeneration areas succeeding. The Social Enterprise Action Plan contains many case studies of where this has been successful.

1.4. Over half of the social enterprises in a 2005 survey were in the 40 per cent most deprived areas. 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. One quarter specifically helped people through providing or brokering employment opportunities, often for socially excluded groups.

1.5. There is a matching shift in public perception of the goods and services they buy and a significant increase in ethical consumption which supports these types of business.

1.6. Social enterprise helps to support some very specialized areas of work, for example in Supporting People there are services run by people who have overcome difficulties in the areas of drugs, alcohol, homelessness etc who are best placed to support people who currently face those difficulties. And community involvement and employment are highlighted as hard outcomes for SP services in the new outcome measurement pilots for the programme.

10 LM Briefing Projects Team May 06 1.7. The social enterprise sector is diverse, including development trusts, community enterprises, housing associations, football supporters’ trusts, social firms, leisure trusts and co-operatives. Social enterprises therefore use a wide variety of legal forms; some incorporate as companies while others take the form of industrial and provident societies. The national umbrella body for social enterprises in the UK is the social Enterprise Coalition.

1.8. For example The Big Issue supports the national homeless agenda, whereas locally Helping Hands was set up to give practical support to older people living on a single estate in Swinton.

1.9. The size of the organisation dictates their capacity to engage fully with local government to deliver services through procurement. There are many reasons for this. The resources to complete competitive tenders can be beyond the means of many local small businesses; lack of information about the benefits of social enterprise can lead to them being compared unfavourably with profit-making organisations; there is little support or advice geared at this type of social business; organisations making less profit find it more difficult to find investment finance.

11 LM Briefing Projects Team May 06