Social Enterprises and the NHS - Unison

4 Varieties of social enterprise
4.1 Defining social enterprises
‘Social enterprise’ is characterised not by a particular
legal status or organisational arrangement but by a
social ethos. The definition adopted by the UK
government is as follows (DTI 2002):
Social enterprise is a business with primarily social
objectives whose surpluses are principally reinvested for
that purpose in the business or in the community, rather
than being driven by the need to maximise profit for
shareholders and owners.
Social enterprises tackle a wide range of social and
environmental issues and operate in all parts of the
economy. By using business solutions to achieve public
good, the government believes that social enterprises
have a distinct and valuable role to play in helping
create a strong, sustainable and socially inclusive
economy.
Many different types of organisation can be described
as social enterprises. Spear (2001) identifies four main
categories:
• co-operatives and mutuals (worker cooperatives,
social care cooperatives and social employment
cooperatives, social firms and mutual organisations);
• trading voluntary organisations;
• intermediate labour market organisations;
• and community businesses, particularly in the most
severely disadvantaged areas.
One important difference between the various definitions
of social enterprise is the emphasis on ownership and
governance arrangements. Social ownership is not key
to the government’s definition cited above. In contrast,
for social enterprises in the cooperative tradition, social
ownership is a key dimension, and democratic member
control is the second of the seven cooperative
principles. Social enterprises may be owned by their
users, customers, employees, the wider community,
trustees, public bodies or a combination of different
stakeholder groups.
4.2 Charting the field
Social enterprises in the UK provide a wide range of
services, including community transport, social care and
leisure services. They vary in size from the Co-operative
Group, with a turnover of nearly eight billion pounds, to
small-scale initiatives, often based in disadvantaged
communities, providing skills, training and employment
opportunities. Well publicised examples of successful
social enterprises include: ECT (community transport
and recycling services) which developed from a
voluntary organisation into a mutual industrial and
provident society; Greenwich Leisure, which was
converted from a local authority department to a co-
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operative social enterprise, now replicated in 13 other
local authorities; the Eden Project; the ‘Big Issue’; Welsh
Water, a company limited by guarantee, formed in 2000
and modelled on BUPA; and the Future Health and
Social Care Association (turnover of 1.6 million) set up
by the Afro-Caribbean community in Birmingham. In
local authorities, the two areas where social enterprises
have been most successful are housing and leisure
services.
A range of national and regional organisations has been
set up with the specific purpose of supporting social
enterprise. For example, the Social Enterprise Coalition
– the UK’s national body for social enterprises – has a
membership of over 5,000 organisations, including
housing associations, development trusts, cooperatives
and other mutuals, credit unions, social firms and leisure
trusts.
However, despite efforts by the Social Enterprise Unit,
and others, to chart this diverse sector, mapping social
enterprises, or demonstrating growth in the sector, has
proved a challenge given fluidity of definition, diversity of
size, and a variety of organisational objectives.
Estimates vary widely. A survey of social enterprises for
the Small Business Unit (IFF 2005) identified only 15,000
organisations, with over half located in the most
deprived areas. The typical social enterprise employed
10 people, and only 2% employed more than 250
employees. A report for the DTI (ECOTEC 2003) found
around 5,300 social enterprises. In its advice for
mapping the numbers of social enterprises (DTI 2004)
the DTI included three tests (although there is a large
degree of flexibility in each): organisations should be
registered with Companies House as Companies
Limited by Guarantee, and Industrial and Provident
Societies; they should be actively trading (defined as a
trading income of 50% and over); and have primarily
social objectives, reinvesting surpluses in the business
or in the community.
Latest figures from the Annual Small Business Survey
suggest that 55,000 social enterprises in the UK meet
the government’s broader definition (quoted in 4.1
above), representing about 5% of all businesses with
employees, and with a combined turnover of about £27
billion (1.3% of the total turnover for all businesses with
employees) (Office of the Third Sector 2006). It has
proved difficult to measure their quality or impact and,
increasingly, the commercial sector is collaborating with
social enterprises. According to a review of the Social
Enterprise Strategy, carried out by independent
consultants (GHK 2005), there was limited evidence for
the widespread perception of a growth in social
enterprises.