Podium: Social enterprise needs support

From a speech by the director of the New Economics Foundation to an industrial common ownership conference

THE NEW Economics Foundation (NEF) is one of the most creative and energetic agencies working for social change in the UK.

A just and sustainable economy will not come about purely through rational debate. People must be able to organise as citizens in favour of it.

To this extent, the new economy already exists. It encompasses a diverse range of economic activities pursued for social, environmental or personal goals - ranging from worker co-operatives, intermediate technology and organic agriculture through to local currencies. Many of these have grown dramatically in the last 10 years, but are still a small subset of the overall economy. How they grow is an art, not a science.

I will focus on one arena of social action which has huge potential: the range of community-based economic development initiatives operating in relation to neighbourhood renewal, achieving viability through a mix of trade, income generation and grant. The term "social enterprise" is often used to describe these.

They provide services, develop skills, create employment and foster pathways to integration for socially excluded people. They operate at the interface between public and private sector, being part of neither but engaging closely with both through partnerships, stakeholding and joint venturing as well as through complex trading and contracting relationships.

The concept of the "social economy" is typically seen as a recent arrival to the UK. Samuel Smiles in fact used the concept in the last century to describe Victorian brands of self-help and mutual aid. The use of the term in continental Europe encompasses, most typically, all co-operatives, mutuals and voluntary organisations. This definition focuses on institutional forms in which profit is reinvested in different ways rather than distributed to shareholders.

The NEF estimates that around 1.5 million people are regularly engaged in community economic initiatives. A 1997 report, "Valuing the Social Economy", for Community Enterprise Strathclyde, estimated that 42,000 people were employed in the social economy - broadly defined - in lowland Scotland (around the same as the Scottish electronics sector), with a further 60,000 people volunteering.

The social enterprise sector has proved effective at developing services, which are unattractive and inappropriate for the private sector, or cannot be delivered so effectively by the public sector.

In practice a range of voluntary organisations and local authorities support social enterprise start-up by acting effectively as "social enterprise incubators". An example of such "nurturing" is the Environment Trust in east London, which has been supporting a social enterprise in St Lukes in Canning Town. Local people campaigned to acquire a church, which has been converted into an enterprise centre, a health centre and a community cafe. This incubating function would benefit from active support .

If we are to provide good quality housing - particularly housing that is tailored to local needs - housing providers need to keep tenants and local people not only informed but involved. Yet more and more social housing is delivered by unelected charitable organisations, where once it was provided by local authorities.

Over the last few years, the NEF has been involved in social auditing which explores how to fill this democratic deficit in social housing. Social auditing can be used to develop stronger links between an organisation and its stake-holders - particularly to those who have traditionally held less power.

The Black Country Housing Association published the first social report in the housing world in 1997, which spelt out the views of its stakeholders, including its tenants and community groups. This pioneering approach has been built upon by the Penwith Housing Association, the Presentation Housing Association, the Liverpool Housing Trust and the London and Quadrant Housing Association.

The social enterprise movement needs to be able connect to mainstream business support services rather than lock into alternative networks. The Regional Development Agencies can play a critical role in the development of strategies to develop and support social enterprises.

Each of these steps is as much a challenge to the third sector as to government. It will, above all, involve a change of mindset on the part of the third sector away from the negative of being non-governmental towards a positive vision of becoming self-governing.