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Judge 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 2P There is no alternative 3P 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 4P 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) • 5P Market Efficiency Theoretically, free markets are efficient Not necessarily fair Market failure Negative impacts on: • Fairness • Equality • Social mobility 6P 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 7P 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? 8P 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) 9P Social and Community Enterprises Distinctive characteristics: • Enterprise orientation: Trading goods and services Public sector procurement Asset based development • Social aims • Social ownership 10 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 11 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 12 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 13 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 14 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. 15 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 16 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 communitybased organizations Actively promoted social enterprises across government departments 17 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 18