Oral statement to Parliament

The importance of social enterprise

This speech was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

I ask the obvious question which is: what is it about social enterprise which attracts three ministers and the leader of the Opposition to your…

I ask the obvious question which is: what is it about social enterprise which attracts three ministers and the leader of the Opposition to your event? You obviously have got a formula, an idea, which grabs people.

I think it is a mixture of things. First, I think the sector is big and growing. The statistics are rudimentary, but as I understand it there are currently around 800,000 people who work in social enterprises in some form.

I think it is also important in terms of the Government agenda. It is set out in the Coalition Agreement how we would like social enterprise to be involved in the public sector.

I think also, there is something more interesting. You have managed to bridge the gap in ideas that has been around for a very long time and hitherto has been very difficult to reconcile. On the one hand there is business, enterprise, profit-seeking and markets; and on the hand there is ‘doing good’ and charity and ‘society’. These two sets of concepts have so often been seen as fundamentally different, antagonistic and opposed. But they are not.

On the business side, there is a growing sense that the old-fashioned model of large companies which are focussed on profit-maximisation is not sustainable, and it is not socially acceptable either. There has always been a strand in big business which thought a little wider. I grew up in York and the dominant employers were the Quaker chocolate factories - my mother in fact worked on the production line for Terry. There was a very strong sense from Terry, Rowntrees and others that business was linked to society in some sense.

I think this is now coming back in a modern form. There are many shareholders that expect more of business than profits - they want social responsibility. Young people joining companies will challenge their future employers in terms of their moral commitment. I worked for a big international oil company and it was increasingly clear that they had to respond to the agenda of the young people who were being recruited. And not least there are consumers who are looking for more - they want values - as can be seen from the fair trade movement.

On the other hand we have the charitable sector and the mutuals sector having to be, and wanting to be, businesses. So there is a convergence between companies on the one hand who want to do good by doing well, and those who do well by doing good. They come to a meeting point which is how I would define social enterprise. There was a reminder of this recently when the Prime Minister launched ‘Start Up Britain’ which was all about encouraging people to start their own businesses and entrepreneurship. The first participant from the floor was a man who had what we might call a misspent youth - he had had a drug problem. His enterprise was about helping drug users turn their lives around. So I think it’s the convergence of these two ideas which excites you, and excites me, and gives this whole movement such momentum.

It can be difficult for those of us who deal with policy to get our heads round it because there are so many different organisational forms. When I am dealing with the mutuals sector I know who I am dealing with. There is a standard form of legislation for the building societies and the mutual insurers. But with social enterprise we are dealing with a whole set of different institutional structures, we’re dealing with unincorporated businesses, as well as the more formal structures including the 40,000 community interest companies, the industrial and provident societies which in turn can be sub-divided into the co-ops on one hand and the community benefit societies on the other where there is a structure defined by Parliament, and then there are the limited liability partnerships. So there are various different institutional structures which overlap and what we have to do in Government is to understand them and to see what ways they can be reinforced by legislation and regulation.

In conclusion I wanted to raise the questions: What is Government doing? What should we be doing? What do you want us to do? There are several areas where we are already doing things - firstly, finance. Enterprise, social or otherwise, cannot function without finance. We know there has been a major banking crisis and it has affected flows of capital, especially to SMEs, and social enterprises have been caught up in that liquidity problem too.

There are two institutions which are trying to alleviate that - one is the Big Society Bank and the other is the Regional Growth Fund. Bids to the Regional Growth Fund have been submitted to help the provision of finance to various community interest groups. The outcome of bids will be announced soon. Any other ideas from the sector about how we can help with unconventional financing would be very helpful.

My Department is carrying through some very radical reform with the Royal Mail and Post Office. The change in the ownership of the Royal Mail has been controversial but is now going through Parliament. The other side of that story, which has not attracted much attention, is what we are proposing to do with the Post Office network. The Post Office network is an interesting structure: a lot self-employed post masters and mistresses, working under what in effect is a nationalised network manager. What we want to do is turn that into a form of social enterprise, perhaps with a mutual structure, where the people who own the post offices have an ownership structure which also involves their customers as well as the employees in the larger post offices. We want to integrate them into a new form of organisation. Ideas from your sector on how we do that would be very helpful.

Finally we are putting our energy behind a process of private sector recovery. We mean private sector in the widest sense, not just traditional companies. We want to involve social enterprise in that. There are a variety of initiatives in place including a better website to help start-up companies, mentoring systems are being set up to help growth companies, and we want to get rid of a lot of the regulation which inhibits small companies from growing. We want you in the social enterprise movement to be part of that and we want to discuss with you how best we can take this forward.

Thank you for inviting me here. I think what is happening in this audience and in the wider field is genuinely exciting. As the Secretary of State for business, I see you very much as part of the business sector and we want to promote you and help you to succeed.