Seb Elsworth: Social enterprises can play a unique role in helping employment bounce back from Covid-19

Danny Kruger’s review of the charity sector and Covid-19 recovery offers a unique opportunity to make the case for our sector

Seb Elsworth
Seb Elsworth

Danny Kruger has been asked by the Prime Minister to undertake a rapid review of the role the sector can play in the Covid-19 recovery. His brief asks him to look at a wide range of areas including how the sector can support the NHS, public procurement, support for young people and the roles of philanthropy and social investment.

But his task is more fundamental than developing detailed policy. The sector has not been at the heart of government thinking about the future of our communities, the economy or public services for some time, and the Covid-19 crisis has made this all the more stark.

Kruger has the opportunity to change this, to develop a narrative that elevates the importance of our sector and the unique role we can play in the recovery and beyond, and to develop excitement in Number 10 and the Treasury around that.

A good starting point for this is the unique role social enterprises play in creating jobs.

Covid-19 is creating an employment emergency as well as a health emergency, with the Office for Budget Responsibility estimating that more than three million people will find themselves unemployed this year. The Resolution Foundation estimates that it could take seven years for employment to return to pre-Covid-19 levels. As the crisis continues to exacerbate already intolerable inequalities, the people who will be most affected will be those who are already struggling: the young, low-skilled and poorly paid, and those in already more deprived communities.

Over the past few weeks a group of leading social enterprise representatives, funders and investors have come together to shape the case for the sector. We naturally focus on our social impact, but in pure economic terms the track record of social enterprises in creating jobs is remarkable:

  • Social Enterprise UK data shows that 100,000 social enterprises employ two million people, contributing £60bn to the UK economy;
  • For every £100,000 of turnover, social enterprises create three jobs, compared with two-thirds of a job in the private sector;
  • Social enterprise employment is concentrated in more deprived communities, so it creates disproportionately more jobs there – about 30 per cent of the total jobs created by social enterprises – and thus helps keep money circulating in those places;
  • Social enterprises target job creation for those who are furthest from the labour market. Forty per cent of social enterprises actively seek to employ people with disabilities, care leavers, ex-offenders, the homeless and veterans;
  • Social enterprises are good employers, with more than 75 per cent paying the living wage to all staff, and they are more likely to provide training than small to medium-sized enterprises.

There are thousands of examples to look to.

Giroscope, a community business in Hull, trains local people who are far from the labour market to renovate disused houses, providing work placements for more than 140 people last year. This included ex-offenders, young people, the long-term unemployed and people with mental health problems or learning difficulties. Seventeen people from the volunteer programme moved into work during the year, three of whom were employed by Giroscope itself.

UnLtd’s Access to Employment programme has supported 95 social entrepreneurs to create 2,500 jobs and training opportunities for people often shut out of the labour market, such as disabled people, care leavers and the homeless, improving tens of thousands of lives in communities throughout the UK.

The programme also enabled 32 social ventures involved in directly tackling employment to raise £2.3m of public and private sector investment. An independent cost-benefit analysis found that, for each disabled person served by the initiative, £45,000 of “social value” was created, including savings on benefits, national insurance contributions and improvements to their quality of life.

Social enterprise can therefore make a unique offer to the government just as tackling unemployment will become the top priority, and it is an offer that needs to be listened to. Once it is, we can then seek to build the sector’s role and influence so that social enterprises can create even more jobs.

There are four areas to develop:

  1. A seat at the right tables: social enterprises should be represented just like other groups – such as the CBI and British Chambers of Commerce – at the heart of central, regional and local government as the economic plans for the recovery are developed.
  2. Flows of public money, such as the Stronger Towns Fund, the future Shared Prosperity Funds and public procurement, should better support the role social enterprises play as job creators.
  3. Specific interventions to support trading growth and job creation in social enterprises such as Trade Back grants or a reinvigorated Future Jobs Fund.
  4. Supporting the right sort of investment into the sector through new blended finance models, extended guarantees and the expansion of social investment tax relief.

This is a unique opportunity to make the case for our sector, because we are needed more than ever. We should all help Danny to pull this off.

Seb Elsworth is chief executive of Access, a foundation that helps to widen access to social investment for charities and social eterprises

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