Social enterprises put the social value into services

There's a third option for public service delivery - social business - but it's not getting the publicity it needs, says Rod Schwartz of ClearlySo

Rodney Schwartz
Rodney Schwartz

ClearlySo, the company I run, recently held a seminar on how social enterprises can work with local authorities to take on the running of public services. Aside from a bit of shameless self-publicity, I mention the event because it crystallised a number of critical issues in the increasingly hot topic of public service delivery by social enterprises.

Much has been written about the government's plans for the public sector. However, the debate seems to be disappointingly one-dimensional.

Those on the left see it as a choice between the status quo and government plans to privatise the entire show. Only services deemed unattractive by the private sector would remain under state control. The result would be a woefully inequitable system in which only the wealthy can afford services.

Those on the right, meanwhile, see the issue as one between reformers and statists. They point to inefficient state-run services producing sub-standard results. The entire system, they say, is desperately in need of modernisation and reform. Both sides have been guilty of disingenuousness to a greater or lesser extent. Politics gets in the way - and any chance of a healthy debate appears lost.

First, let's address the elephant in the room: the current situation is unsustainable. The state, as we know and love it, has become unaffordable. Change is coming, like it or not.

However, it is not just a choice between public and private providers. There is a third - and increasingly viable - solution in the form of social enterprise. Our seminar showcased social entrepreneurs who had helped save public libraries, schools and health services. These companies can run services in a financially sustainable manner, but also in a way that maintains social value to the local community.

Unfortunately, we see little mention of this option in the wider public debate. In a recent BBC Panorama documentary about the spin-out of health services, the words "social enterprise" were mentioned only once, according to my count - and even that was in an off-hand sentence by an interviewee.

There is also the issue of whether commissioners in the public sector fully understand or trust social enterprises. They worry whether these new organisations can do the job.

Last month, Central Surrey Health lost out on a potentially transformative contract, located in its back yard, to a much larger private sector provider. This provoked an outcry from those who feel commissioners are not giving social enterprises a chance.

Against this backdrop, the Public Services (Social Enterprise and Social Value) Bill, put forward by the Conservative MP Chris White, is particularly timely. According to White, this would require public sector commissioners to prioritise organisations that could offer genuine social value. This would be a boon for social enterprises struggling against larger and better-funded private sector corporations to win business.

The private sector will probably complain that this bill would grant an undue advantage to social enterprises in the race for public sector contracts. However, the bill might also encourage private sector providers to partner with social enterprises. The result? A supplier that has capacity to deliver while maintaining a social value.

Is this too much to hope for? Perhaps - but a good start would be for the debate to swing in a more open-minded direction.

Rodney Schwartz is chief executive of social venture capital website clearlyso.com


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