A Brexit deadlock-breaking election approaches, and while we wait for details from the party manifestos, the positive news is that – whoever wins – the years of austerity look to be over. This will mean increased public spending and investment, and a chance to rebuild things in new and progressive ways.
Cutting through the divisiveness of Leave vs Remain, there are significant issues that need to be addressed. Brexit revealed deep-rooted problems, rather than created them. Economic and power imbalances between cities and towns, between urban and coastal areas, between people with access to opportunity and those without, have become entrenched over decades.
Solving these issues is not simple. It requires a patient approach that invests in communities, giving them the tools, resources and support they need to develop and improve their local areas and to help them prepare for large-scale shifts in workforce, economy and climate. A wider network of partnerships between social investors, public agencies, communities and the social sector is needed to design, finance and implement these solutions.
Our job at Social Investment Business is to help build stronger local economies and revitalise communities, while giving people more power and control over their lives both in the workplace and where they live. Based on our experience of providing more than £400m of loans and grants to thousands of charities and social enterprises, here’s our thinking on what the next government’s priorities should be.
Reinvigorating ‘left behind’ places
There is a complex range of issues affecting the local economies of former industrial areas, coastal towns and rural economies: areas of the country that have not benefited from the economic and political forces that have shaped modern Britain. Not so much left behind as kept behind.
A new, more equitable approach should look to build broad local economic networks that combine investment with community building and workforce empowerment. The social sector will be key. We recommend:
- Establishing a £1bn Local Social Economy Fund to invest in social businesses in the most disadvantaged areas for more than a decade with patient, flexible finance and dedicated business support.
- Broadening and strengthening the social value act, including a minimum weighting for social value of 20 per cent and holding public bodies accountable.
Investing in high streets
The depletion of local economies is often made visible in the slow decline of town centres and high streets. High fixed costs, including rent and business rates, have forced many retailers and businesses to close: an estimated 29,000 retail units have been abandoned for more than 12 months.
To reverse this, high streets must become dynamic public spaces where people come together. We’ve seen that communities can run pubs and libraries, but there is also potential to refocus the high-street business model on local people, bringing real estate into community ownership and rethinking future high streets with and for the community. We recommend:
- Creating a £1bn Community Asset Fund, as recommended by Locality, to increase community asset ownership and build capacity to run those assets.
- Exploring options for the transfer of disused urban heritage buildings on the high street to those who will restore, manage and safeguard them.
- Allocating funding for the development of future high street economic models.
Creating fairer employment
Shifts in the labour market towards a service and knowledge-based economy have dramatically changed the nature of work. There are increasing numbers of self-employed workers – in the gig economy, on zero-hours contracts – for whom the existing regulatory and welfare systems don’t work and who have fewer rights and precarious income.
Shared ownership business models have the potential to transform this: worker cooperatives, mutuals and employee-owned businesses, as well as hybrids. These models share returns more equitably, pay higher wages and provide better benefits to employees. Social investment can help with the conversion and "socialising" of private business and the expansion of shared ownership succession. We recommend:
- Creating a dedicated fund to invest in the conversion of businesses to employee ownership, providing catalytic capital for shared ownership as business succession.
- Supporting investment in cooperatives and mutuals by establishing criteria and options that allow cooperative societies to benefit from tax incentives.
- Developing the model of multi-stakeholder cooperatives for the most precarious workers, starting with those in the caring economy (50 per cent on zero hours, 83 per cent women).
Eventually, our politics must move past the corrosive debate over Brexit. There is an urgent need for a new economic settlement that can remedy the long-standing fissures in British society and work for all. We know too that social investment and the wider social sector have an important role to play, a role that will be more effective with the support of government.
It is therefore vital that, whichever party wins, they make a concerted effort to kickstart a renewed social economy by providing patient and flexible finance, investing in communities and expanding fairer business models that share power more evenly.
Will Thomson is policy coordinator at Social Investment Business