Social enterprises can play a critical role in the Government’s plan to ‘level up’ the UK economy as we emerge from the pandemic and help tackle regional inequality, a Liverpool business leader says.
Maggie O’Carroll, chief executive of The Women’s Organisation, suggests that given social enterprises are already embedded into the communities in which they work, they are ideal conduits for local “wealth-building”.
A report published this week, commissioned by The Enterprise Research Centre in partnership with The Women’s Organisation, recommends that further research is needed in order to determine a clear policy focus on how best to invest and support the growth of social enterprises, specifically as a vehicle to reduce regional inequality and create genuine impact in places such as Liverpool city region.
State Of The Art Review 52: What can Social Enterprises contribute to the ‘levelling up’ agenda?, researched and written by Dr Catherine Robinson, highlights the positive impact of social enterprise across the UK and the vital role they can play in tackling regional inequalities.
The second in a series of five research papers, the SOTA Review also focuses on the lack of accessible funding and out-dated policy which, if improved, could play a pivotal role in the post-COVID-19 recovery.
The Government’s £4.8bn Levelling Up agenda, introduced in June this year, proposes to reset the relationship between central and local government and put local authorities at the heart of a plan to rebalance regional economic disparity. Recent evidence on the impact of COVID-19 suggests marked differences across left-behind regions, increasing the complexity of how best to respond and support regional development.
Regional inequalities have been further exacerbated by pressures created by the pandemic. The Centre for Cities, in its annual Cities Outlook report argues that COVID-19 has made levelling-up four times harder than in pre-COVID-19.
The report recommends that society and policy would be well served by a broader interpretation of regional success, which incorporates wellbeing in a wider sense. This creates space for active participation of social enterprises, who already operate on a local level and often at the margin of the economic activity, developed on a needs-basis.
Ms O’Carroll says: “Inequalities between wealth and spending has created serious social deprivation, being felt most painfully by people living in the north.
“Social enterprises create economic opportunities at the margins, and in many instances employ those facing the most significant barriers.
“In addition, they create opportunities for skills development appropriate to the needs of the communities they operate in, based on social and environmental needs.
“The role of social enterprise businesses in our country’s recovery post-COVID should certainly not be underestimated but having a robust evidence base is critical to effective policy and investment decisions.
“This is why we are so pleased to be working with the Enterprise Research Centre and to be able to utilise its expertise. These reviews provide important insights on how the social economy is at the forefront of the UK’s economic and social recovery.
“Despite the clear benefits and positive impact of social enterprises identified in the SOTA Review, there are several barriers to exploring their full potential, the most affecting being lack of funding. I’d therefore urge the government to consider additional funding for social enterprises as a matter of priority.
“As recommended in the report, devolved funding should have a requirement, not just an intention, that a minimum percentage of investment is through local, third sector infrastructure. This is vital is the levelling up agenda is to be in any way successful or measurable in the mid to long term.”
Dr Vicki Belt, Deputy Director of Impact and Engagement at the ERC, added: “The ERC are delighted to be working with The Women’s Organisation on this series of evidence reviews exploring the role that social enterprises can play in economic recovery.
“This latest review focuses on the highly topical theme of levelling up, clearly a key area of policy interest for the UK government. Social enterprises are already doing great work across the country, but it isn’t always recognised.
“This review highlights the importance of developing policy that explicitly recognises social enterprises as a mechanism to address inequalities, raising ambitions for the sector so it can play a part in turning the levelling up promise into reality.”
Social enterprises and not-for-profit organisations are often viewed as being outside the economic mainstream. However figures published in 2019 by SEUK demonstrate a contribution of around £60bn to the UK economy in 2018, accounting for around 100,000 businesses employing around 2m people.
Research published by The Heseltine Institute in May this year found there were 114 community businesses operating across the Liverpool city region in 2020 (pre-pandemic) collectively earning £19m of income, employing 500 staff, owning £27m of fixed assets, and holding net assets worth £22 million.
That research also indicated that community businesses in the region were much less likely to fail and had higher five-year survival rates than regional and national averages for all enterprises.
The full State of The Art Review 52: What can Social Enterprises contribute to the ‘levelling up’ agenda?, research can be found here.
The Enterprise Research Centre is the leading centre of excellence in the UK for research into the growth, innovation and productivity of small and medium-sized enterprises (SMEs).
The ERC has become the ‘go-to’ reference point for anyone looking for robust, trusted data and insights on SME performance with project-based research covering a range of themes.
A ground-breaking partnership with The Women’s Organisation was announced in August 2020 along with a special series of five SOTA reviews. The research offers expert insights into how social enterprises can play a key role in driving economic recovery and support the communities hit hardest by the impact of COVID-19.