The onward march of the Scottish social economy

Social enterprise is said to be booming north of the border, reaching people where there has been a failure of the market, writes Andy Hillier

Cope Ltd: soap products for Shetland and the Orkneys
Cope Ltd: soap products for Shetland and the Orkneys

In the 16 years since Cope Ltd began trading in Shetland, it has grown into a social enterprise with an income of more than £1.1m a year. Its five businesses, which provide employment opportunities and skills training for people with disabilities, include the catering firm Shetland Kitchen Co and the Orkney Soap Company. And it is just one of more than 5,000 social enterprises in Scotland, according to a census published in September.

The study Social Enterprise Census Scotland 2015, backed by the Scottish government and produced by the research organisation Social Value Lab, says there are 5,199 such enterprises in Scotland, and they collectively employ more than 112,000 people. Together, their annual incomes total £3.63bn. The census found that social enterprises were spread across a wide geographical area, with 27 per cent located in the cities of Glasgow and Edinburgh, and 22 per cent in the Highlands and Islands.

Ingrid Webb, chief executive of Cope, says: "There's an excellent community of people who have driven social enterprise forward in Scotland. There's an awful lot going on in the central areas, but also in the Highlands and Islands. There's lots of good people in the industry."

About 60 per cent of Cope's business comes from people buying its products over the counter, but it also receives support from the business sector and local authorities. For example, Serco Northlink, which runs the ferry between Orkney and the Shetland islands, purchases its soap and sandwiches. "The local authority is coming around to the idea as well, and we have service-level agreements for providing skills development for people," says Webb. "But we are also talking to it about getting involved in the procurement side."

The census says that social enterprises in Scotland operate in a broad range of sectors, including childcare, transport and retail. However, the majority operate either in housing (41 per cent) or health and social care (26 per cent).

Fraser Kelly, chief executive of the membership body Social Enterprise Scotland, says the census highlights how social enterprises are responding to local needs. "The important thing for me is that we're reaching people where there has been a market failure and it is difficult for the private sector to intervene," he says. "We're reaching areas where there are perceived to be intractable problems in Scotland around health, housing, employability and environmental sustainability."

Challenges remain

But despite the indications in the census of a strong and growing social economy in Scotland, Kelly says, big challenges remain for social enterprises. "There are pressures in terms of investment – how it flows and what it should look like," he says. "Then there is the whole issue of contracting and the direction in which the market is developing. For example, is it moving more towards public service delivery, or towards the public's awareness of social enterprise and their willingness to buy products and services that are making a difference?"

Kelly believes that political support has helped social enterprise in Scotland. The sector, he says, enjoys cross-party support and the Scottish government has consistently backed it in recent years. He cites two helpful pieces of legislation: the Procurement Reform (Scotland) Act 2014, which has helped to create a more level playing field for social enterprises bidding for public sector contracts, and the recently passed Community Empowerment (Scotland) Act, which gives new rights to community bodies and places new duties on public bodies.

Kelly says legislation alone will not automatically change the landscape for social enterprises in Scotland. "You don't change big cultural issues overnight," he says. "But our position in Scotland is considerably better now than it was five or 10 years ago; if we continue to make the same progress, it will be better again in five years."

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