Social enterprises must be more accountable and better at demonstrating their effectiveness, Treasury minister John Healey said last week.
Addressing delegates at the Social Enterprise Coalition conference in Manchester, Healey praised social enterprises as sharing the values of the Government. But he added: "There are questions over the strength of governance in third sector organisations and over the actions needed where there is serious collapse in service provision."
He also said social enterprises needed to work harder at proving the added value they provide to public services and to focus on the needs of users.
"Some claims about the distinctiveness of the sector, as the NCVO has shown, do not stand up," he told the conference. "There needs to be a stronger evidence base and more concentration on performance management."
Healey ignored calls from the Social Enterprise Coalition for tax relief for social businesses that prove they deliver public benefit.
Geraldine Peacock, Charity Commission chairman, used the conference to call for a new government department dedicated to social enterprise and for more co-ordination between different regulators.
The conference also saw the launch of an online video primer that enables social enterprises to calculate their social return on investment. It was developed by the New Economics Foundation and the London Business School and is available on the latter's website.