Allison's Blog

Commissioning of social enterprises affected by cuts

Social enterprises working in the public sector are losing out under cuts, undermining the hope that public policy changes would lead to more contracts, says Allison Ogden-Newton As seen in today's Guardian Public

Public sector cuts are having a detrimental impact on many social enterprises. That's the finding of a report out today from Social Enterprise London, the organisation which I head. Is social enterprise hiring or firing? suggests that the public sector is failing to sustain, let alone increase, levels of contracting to social enterprise with 68% of the 74 respondents reporting public sector cuts had negatively affected them.

Talking to social entrepreneurs every day, I know many are having a difficult time. So I was not surprised to find that growth is rare at the moment and those working with the public sector are finding things really tough. It now seems that the hope we had that changes in public policy would lead to increased public sector contracts was optimistic.

Our survey contrasts with that of Social Enterprise UK's recent Fightback Britain report (based on a look at 200 organisations) that depicts significant progress for social enterprises, which it found had grown faster than mainstream SMEs since 2009, whereas we're seeing a more alarming picture of redundancy and limited public sector commissioning. Although I can't fully explain the divergence, it could come from the particular public sector focus of our report, which led to feedback that there was less contracting and commissioning "as clients are less sure of their budgets and more competition for each contract."

Commissioning came in for particular criticism, with 66% saying they found it more difficult. We read comments like "local commissioners don't know what they are buying," and "if our local authority doesn't hand over contracts soon, there won't be anyone to hand contracts to."

Acting as a valued partner the public sector represents a vital market for social enterprise where many have built businesses around innovative services delivered through statutory contracts. A quarter of respondents confirmed that they had made redundancies this year while the remaining 75% were worried job losses were on the horizon. It seems the symbiotic relationship has stalled, at least for now.

Given localism and efficiency are the two pillars of the coalition government's vision for the future of public services, and social enterprises have such a strong track record in delivering both, these findings are disappointing. Nearly half (44%) of respondents reported losing contracts and, in trying to work out whether size was a factor, it seems social enterprises employing between 25 and 49 employees were most affected; in this group, 3.5% reported a decline.

It was not all bad news, however, a little over half said that they thought that the big society agenda remained an opportunity, although 11% said they didn't know what it was. We had plenty of feedback like: "I see big society as offering a platform for our non-profit organisations to thrive and grow. This is good for the community."

But perhaps the harsh new reality and the inveterate tenacity of social entrepreneurs was most accurately reflected in this comment: "I think 2012-13 will be harder as the full impact of cuts in local authorities take effect. But there might possibly be some opportunities around spot purchasing."