Is the Public Services (Social Value) Act a no go for small contracts?

Allison Ogden-Newton fears that social enterprises with local knowledge will lose out to larger deliverers that can achieve scale

Will the Social Value Act favour larger organisations? Photograph: Corbis Super RF/Alamy

The government's target of enabling over one million former public sector staff to achieve mutual status by 2015 echoes the aspirations of many in the public sector who want to carry on doing the job they love and are interested in more independence – but only if the deal is right. For them, the choice between

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Why social value is more important than 'social enterprise'

Allison Ogden-Newton finds that social entrepreneurs are relaxed about changes to Chris White's public services bill

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• Allison Ogden-Newton
• Guardian Professional, Thursday 20 October 2011 14.20 BST
• Article history

Allison Ogden-Newton, chief executive of Social Enterprise London

If, like me, you have been referring to Chris White's public services (social enterprise and social value) bill as the social enterprise bill, after this week you will have to think of something else to call it. We now know that mention of social enterprise – that bit that many consider as the radical element of the proposed legislation – is to be removed, leaving only reference to social value, which strikes me as a touch of "don't mention the war".

I have to confess that Greg Clark, the minister for decentralisation and cities, told me in December that the government intended just such an amendment, so I was slow to realise that this was news. In truth, the bill is doing better than any of us dared hope and, as to be expected of all private member bills, it has been subject to extensive amendments – but a social enterprise bill that no longer refers to social enterprise has to be a joke, right?

To find out I spoke to June O'Sullivan of the London Early Years Foundation, an organisation that delivers early years services targeted at the most deprived families in five London boroughs. As ever, she cut to the chase. June told me, "What I want from any kind of bill is a level playing field. Local authorities are looking for the best service they can afford and while the social enterprise element of what we do interests councils, when we get feedback from successful contracts, it's all about the service we provide, nothing else."

I asked June what she would like from the legislation and she told me that anything that removed procurement barriers like a mandatory £20m turnover to tender, and added, "getting the concept of social value into their [local authority] heads wouldn't hurt".

This idea was echoed by Mark Sesnan of GLL, a company that manages 100 leisure facilities promoting community health and youth employment, making GLL probably the UK's most successful social enterprise delivering public services. Mark told me: "Having social enterprise in there was powerful, but removing it is not terminal. We welcomed the bill because it asked for government to look for more than just price in contracts. If it still does that then that's great, continuing to describe such activity as social enterprise would have been the icing on the cake."

Mark and June work closely with cuts-ravaged local authorities, which gives them a profoundly pragmatic view. Sarah Richards, director of sustainable environment and enterprise at Essex county council, told me, "We are really interested in social enterprise and its inherent social value and while we might have struggled in response to mandatory legislation, we genuinely welcome any support to our growing relationships with Essex's social enterprise community."

As for removing references to social enterprise, it is my view that as long as our community continues in its struggle to agree a definition of social enterprise, that was always going to be tricky. The impact of what we do, the difference we make to vulnerable people's lives remains the real show and, as for language, June said it best when she told me: "It's not a battle worth fighting; if we try, it will lose us the war".

Allison Ogden-Newton is chief executive of Social Enterprise London

This content is brought to you by Guardian Professional. To join the social enterprise network, click here

Best of the web: Friday 7 October

From big business to Livity, we round up some of the most useful and interesting social enteprise links from around the web

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• Kate Hodge
• Guardian Professional, Friday 7 October 2011 17.01 BST
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Best of the web: Friday 7 October. Photograph: ImageState / Alamy

The Fair Trade Revolution

Tiago Dalvi, founder of Solidarium: Transforme O Seu Mundo, is an Ashoka changemaker who is using his sharp business acumen to help improve the lives of thousands of people in Brazil by connecting local producers with established global retailers like Walmart, JCPenney, Whole Foods, and Target.

Video: what does social enterprise mean to big business?

At the launch of Arc, a social enterprise initiative promising 1,000 new jobs in the Olympic host boroughs, Tim West finds out what big business thinks of social enterprise and asks whether there really is a shift from corporate social responsibility to corporate social innovation.

Where will our young people work?

Earlier this week Allison Ogden- Newton was on the judging panel for the Ernst & Young Entrepreneur of the Year. Social enterprise Livity won the honour, leading Allison to consider the plight and prospects of today's youth.

This content is brought to you by Guardian Professional. To join the social enterprise network, click here.

I heard it on the grapevine

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."

Facing the abyss

I have often said, the best thing about my job is working with social entrepreneurs who change the world through the inspiring work they do. On the other side of that coin lies the hardest part, which is working with those who are experiencing profound difficulties as increasing numbers are, some of whom might even be going, going, gone. These terrible conversations are happening regularly these days. Today, I had that faltering exchange again with another leading social entrepreneur facing such difficult decisions. This is SEL's job and why we are there, to support social enterprises in the good times and bad.

I am glad members call me, just as I am profoundly moved by conversations that start with "Allison, I wanted to tell you myself because I didn't want you to hear from anyone else that we have called in the administrators." I can't tell you the sadness I feel. I am highly motivated to help, as you would expect, and I do evaluate any strategies that might have yet to be visited. No matter how hopeless the situation may appear, there are things that can be done that may just turn the situation around and at the very least it's important to know the correct process for an orderly closure. My hope, shared by us all, is that those who are up against it will be able to turn things around. So much hangs upon their success: jobs, people's futures, social and environmental innovation, advancement for the vulnerable, so, so much.

Most people experience hardship in a recession and although social enterprise has never pretended it is insulated against insolvency, like any enterprise, it can fail as well as succeed, but these are businesses that improve the lives of society's most vulnerable citizens and so carry increased losses because if they can no longer trade, more is lost that straightforward notions of wealth. We should all avoid the consequence of that, if we can.   

CICs – interested?

I am joining a panel at 1pm live on the Guardian Social Enterprise Network website to discuss Community Interest Companies (CICs). I think CICs are great – well I would, we are one – but I also think that a great deal of confusion exists around the structure and its applicability, so I welcome the debate.

In keeping with so much in the social enterprise world, it's horses for courses. Sometimes CICs are spot on, sometimes other types of company structure are called for, it depends on what you want to do and how you are going to operate. I hope I can shed some light on the subject, I shall certainly be reflecting the thoughts of SEL members, many of whom were early adopters of the CIC.

If you want to join in the link is here.

Big society is here to stay and it's time to get used to it: Guardian Public 09.03.11

Photo: Murdo Macleod

Despite opposition from both the left and right on the political spectrum, and a wealth of criticism from civil society leaders, there are reasons why the "big society" is here to stay.

Breaking out of the Bunker

In the last few weeks I have had a growing number of conversations with local authority leaders, CEO’s and officers interested in outsourcing. Driven by financial constraints local authorities of all political denominations are looking at social enterprise with renewed interest. What strikes me is how little they are able to talk to each other, their peers or anyone really, about their plans. There are often good reasons for this silence, such as due process and press management, but the result is folk making some very daunting decisions with minimal support or access to experienced advice.

Since SEL has set up the Transitions training which gives local authority staff that want to set up as standalone service providers advice and support, each session has been heavily oversubscribed. In fact we haven’t got any places left on the program until the 31st January which gives you some indication of the demand. Our consultants are all out and about meeting with local authority managers, and again one is struck by the innovative thinking that is being adopted by some boroughs, and also how hard it is for them to gain a sense of being part of a growing movement.

Well having just come from yet another bunker, full of lovely people doing their utmost to “ac-cent-uate the positive and e-lim-inate the negative” I am here to report that other than the handful of boroughs touting the line “War, what war?” the vast majority are planning to outsource a significant number of services. You cannot predict which boroughs by their politics, nor can you predict which services, I have been surprised on both counts. But this year is going to see a fundamental shift away from direct provision which in my view will dwarf the changes we saw after the introduction of Compulsory Competitive Tendering.

My hope is that as folk start emerging into the light they will be reassured by the company they keep, and in the meantime I at least can say, “you are not alone.”

Guardian Social Enterprise Network: What's big in 2011?

FYI The Guardian has recently launched  its own social enterprise network, which is a real testament to the growth of interest in our meovement. Today they published a piece on what will be big for 2011 , which is well worth a read. My contribution was about message, but I particulalry liked Servane Mouazan from Ogunte’s emphasis on social enterprise and diversity and Nick Temple, from SSE, who gave us a QED to meet the challenge of Rob Greenland’s opportunities and lookalike poisoned chalices.