Judge Business SchoolJudge Business School

There is Another Way: The Social Economy

Dr Helen Haugh

Outline

Introduction: Background Context

The Social Economy

Policy and the Social Economy in England

Social and Community Enterprise

Community Ownership of Assets

Institutional Change

Conclusion: Rebuilding the Economy through Social and Community Enterprise

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There is no alternative

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TINA

Minimal government intervention: reduced expenditure on public services

Free markets: consumers exercise free choice and producers respond to demand

Stimulate and support entrepreneurship and innovation

Focus on the individual

Private property

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Private property

Property rights extend over the right:

• To use• Earn income from• To own • To Control• To change of use• To change the form and substance of• To sell(Furobotn and Pejovich, 1972; Libecap, 1989)

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Market Efficiency

Theoretically, free markets are efficient

Not necessarily fair

Market failure

Negative impacts on:

• Fairness• Equality• Social mobility

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The Economy

Prosperity for some, but not for all

Poverty

Social exclusion

Unemployment

Increasing pressure on public expenditure

Rising consumer activism

2008 Crisis of capitalism and the recession

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The Recession

How can we rebuild our way out of the recession?

More of the same TINA

Keynes: manipulate aggregate demand and increase public expenditure

Is there another way?

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The Social Economy

Cooperatives, charities, voluntary and community organizations, mutuals, non-profit organizations, community businesses, social and community enterprises

Estimated 870 000 civil society organizations in UK

• assets of £210 billion • total income of £116 billion(NCVO 2009)

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Social and Community EnterprisesDistinctive characteristics:

• Enterprise orientation:

Trading goods and services

Public sector procurement

Asset based development

• Social aims

• Social ownership

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Arts Factory and Power Factory

An independent Development Trust based in the Rhondda Valleys, South Wales.

Aims to 'build a stronger community' by generating income through enterprise and using it to provide community facilities and services.

Established in 1990 by local people who were sick of being labelled as "problems" and wanted to create solutions.

Businesses: managed workspace, graphic design, environmental design, stakeholder consultation.

Partnership with major utilities to create wind farm

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Institutional Support

2001 Social Enterprise Unit, Department of Trade and Industry

2002 Social Enterprise Strategy

1. To create an enabling environment for social enterprises

2. To make social enterprises better businesses

3. To establish the value of social enterprises

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Government Action

Community Interest Company (CIC)

Futurebuilders - £125 million investment fund

Social Enterprise Coalition

Community Development Finance Institutions (CDFI)

Community Investment Tax Relief

Extended Small Firms Loan Guarantee Scheme to social enterprises

Annual Social Enterprise Day

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Community ownership of assets

Community assets: physical assets – village halls, community centres, land and buildings

Enhanced property rights for communities

Income generation from asset based development

Other community assets: knowledge and skills; community action and engagement

Benefits: for the organization, the community and society

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Coin Street Community Builders

Located 13 acre site on banks of Thames , London

Has invested in social housing, shops, galleries, restaurants, cafes and bars; sports and leisure facilities, community development and support programmes.

Established by local residents in 1984. Only people living locally can become CSCB members.

The Board employs staff to manage the company on a day to day basis.

Profits are not distributed but are ploughed back into CSCB's public service objective.

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Community Interest Company

Community Interest Statement

Community Interest Test

File community interest report annually

Asset lock: assets to be used for community purposes or transferred to another asset-locked body

More than 2 000 CICs created

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Institutional Change

New legal structure created which will protect community ownership of assets

New government office and cabinet minister appointed in 2006: The Office of the Third Sector and Minister for Third Sector

Opened up opportunities for business through public procurement

Created route for transfer of assets from public sector to community-based organizations

Actively promoted social enterprises across government departments

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Conclusion

Potential contribution to rebuild the economy through social and community enterprise

Potential for social economy to be active in regeneration of the economy and leading a path out of the recession

Top down encouragement and support from government

Bottom up participation of communities

Cross sector support from the private sector seeking new ways of partnering with organizations in the social economy

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