CONSULTATION PAPER

Towards a strategy for the social economy in South Yorkshire

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Invitation to feedback

We are inviting comments and feedback on this Consultation Paper. In particular, do you agree with our proposed “five-point plan”? What support measures for social enterprise – funding and other support – do you think are most likely to have a transformative impact? What else needs to be done to build a thriving social economy in South Yorkshire? Please send your comments and feedback via our online form here:

Social Economy Consultation Feedback Form

Introduction

Last year, on the occasion of International Social Enterprise Day, over 100 social enterprise leaders signed an Open Letter[1] calling for a regional strategy and framework for action to grow the social economy in South Yorkshire and to support the work of social enterprises, cooperatives and community businesses in delivering social and environmental impact.

South Yorkshire has a rich tradition of social enterprise and has been a pioneering region in promoting the development of social enterprise and the wider social economy. This includes previous SYMCA support for the Social Enterprise Exchange programme[2] and the Employee Ownership Hub[3], and more recent Shared Prosperity Fund investment in Sheffield’s Social Enterprise Growth Accelerator[4] and Doncaster’s Community Wealth Builder project[5].

Compared to our peers, however, South Yorkshire risks slipping behind. Greater Manchester, Liverpool and West Midlands, for example, have developed and are implementing ambitious regional partnerships, strategies and action plans for the social economy which place social enterprise at the heart of regional social, economic and environmental transformation.

Our region has the potential to achieve much more but it requires innovative investment, strengthened partnerships, and a regional framework for action on the social economy that recognises its vital contribution to inclusion, wellbeing and environmental improvement.

State of the sector

The State of Social Enterprise survey is a biennial report on the state of the sector, published by Social Enterprise UK (SE-UK). Below are some of the key findings of the 2023 survey:[6]

  • UK turnover of social enterprises was approximately £78 billion (3.4% of GDP)
  • Social enterprises generated more than £1.2 billion profit of which £1 billion was reinvested into their social and environmental missions
  • Total workforce of social enterprises was around 2.3 million people UK-wide
  • 58% have leadership teams that are at least half female
  • 43% have at least one leader from Black, Asian or minority ethnic background
  • 22% operate in the most deprived areas, compared to 14% of wider businesses
  • 65% of social enterprises in the UK have a plan for reducing greenhouse gas emissions with 19% having a core mission to address climate change

Social economy in South Yorkshire

Regional survey data from SE-UK similarly highlights the diversity of the social enterprise workforce in the Yorkshire and Humber region in comparison to the UK as a whole[7]:

  • 59% of Y&H workforce were female (UK average 47%)
  • 11% from Black, Asian and other minority ethnic groups (UK 18%)
  • 10% people with disabilities (UK 13%)

Social enterprises are particularly involved in people facing sectors. The SE-UK survey highlights health care, social care, education, skills development, and creative industries as the most frequently cited trading activities of social enterprises in Yorkshire and Humber.

Social economy organisations take various forms including companies limited by guarantee, community interest companies, co-operatives and community benefit societies. Companies House and the Mutuals Register data indicate the scale of the sector in South Yorkshire:

Registration type Barnsley Doncaster Rotherham Sheffield South Yorkshire
Companies Limited by Guarantee (exc. CICs) 262 405 226 1207 2100
Community Interest Companies (CICs) 56 157 56 237 506
Co-operative and Community Benefit Societies 21 31 11 42 105
Total 339 593 293 1486 2711

[Data as at 20 February 2024. Only “active” companies included from Companies House data. Only currently “registered” societies are included from the Mutuals Register. Not all companies limited by guarantee are strictly social enterprises.]

Strategic value

Social enterprises demonstrate a better way to do business, prioritising people and planet and using the majority of any profit to further their mission. In doing so, they contribute to reducing economic inequality, improving social justice and to environmental sustainability.

Among key benefits delivered by social enterprises are:

  • contribution to social value and community wealth building
  • promoting and strengthening a culture of entrepreneurship
  • ability to reach groups facing various forms of disadvantage and exclusion
  • diversity of the social enterprise workforce and of new social entrepreneurs
  • retaining economic wealth and social capital in the locality and community
  • flexibility and innovation in responding to multiple socio-economic challenges
  • higher levels of resilience and longevity than private business models
  • high commitment to carbon reduction and environmental sustainability

Challenges

Research from SE-UK and others indicate some persistent challenges to social enterprise success which highlight the importance of specific and specialised interventions in support:

  • lack of awareness within mainstream business support provision of appropriate models of incorporation and governance for social enterprise
  • social enterprise leaders need to develop business understanding to translate a passion to solve a problem into a viable and scalable business proposition
  • access to finance requires specialist understanding of the social investment market such as blended grant/loan products and community shares
  • equity finance is rarely appropriate as social enterprise purposes are usually entrenched by an asset lock and a cap on financial return on investment
  • better understanding is needed among purchasers and decision makers of the strengths of social enterprise and benefits of building the social economy

Key findings from the State of Social Enterprise Survey 2023 include:

  • 67% of social enterprises cite economic conditions as a barrier to growth
  • 62% cite financial barriers, with access to grant funding a key issue
  • 40% say the forms of finance available are unsuitable for their business
  • One third say they lack skills to obtain external finance and investment
  • 52% of respondents reported the use of external business support

Regional comparators

There has been growing recognition, over the last ten years, of the vital role of social enterprise in building a more sustainable and inclusive economy. UK-level policy and legislation has contributed, with the growth of Community Interest Companies, reform of Cooperative and Community Benefit Society legislation, the Social Value Act, Social Investment Tax Relief, community asset transfer, the release of dormant assets etc.

The Devolution Deal provides an opportunity for more focussed regional level policies and investment in the social economy. New thinking around inclusive and sustainable economic development – articulated in models such as community wealth building, doughnut economics, and pursuit of the Sustainable Development Goals – has contributed to the emergence of ambitious regional strategies that seek to change the economic landscape.

The Liverpool Social Investment Pathfinder (2023) aims to be a “national exemplar” of the transformational impact of social enterprises. Its ambition is to grow social investment in the region by £50m over the next five years, boosting social business and creating 4,500 jobs. It is supported by £6.5m initial funding from Liverpool City Region and Power to Change.[9]

The Greater Manchester Enterprising Communities Fund (2023) is a £4.1m fund offering social businesses up to £100,000, including a £20,000 grant. Backed by GMCA, Access Foundation, Esmee Fairburn Foundation and Greater Manchester’s credit unions, it is part of an ambition for Greater Manchester to become “social enterprise capital of the UK”.[10]

The West Midlands Framework for Action for Growing the Social Economy (2021), backed by WMCA, has an ambition to double the size of the region’s social economy from £3 billion to £6 billion over the next ten years and to double its social impact. Initial investment (2023) of £2m over 15 months includes £1m in grant funding and £1m for other business support.[11]

Towards a strategy and framework for action

In the face of multiple crises – the cost of living, health and social care, the climate emergency – we cannot afford not to work together on an ambitious strategy to mobilise the potential of social enterprise in South Yorkshire and to build the region’s social economy.

At the heart of such a strategy should be the fair and sustainable wellbeing of people, place and planet. We need a “whole ecosystem” approach that can contribute not just to increase in the size of the social economy but to increase its quality, impact and efficiency – the Social Return on Investment – and to greatly increase its proportion of the economy as a whole.

Recognising the interdependency of social and environmental purposes, the strategy should be aligned with the region’s target to achieve net zero by 2040, drawing on socio-ecological perspectives to promote new approaches that move beyond consumerism and growth.[12]

To take this forward we are proposing a five-point plan:

  1. A Social Economy Task Force charged with driving the development, over a period of six months, of an ambitious Regional Strategy to build the social economy.
  2. Research and analysis to identify innovative, emergent and best practice from the UK and abroad that can contribute to design of a transformative Framework for Action
  3. The creation of an open and participatory space – the South Yorkshire Social Economy Forum -to engage the region’s social entrepreneurs and sector stakeholders
  4. The identification of major investment that can underpin an ambitious strategy for social economic development aligned with South Yorkshire’s net zero campaign
  5. Engagement of strategic national partners that can contribute to knowledge sharing, comparative analysis, UK-level policy formation and mobilising investment.