Can 2012 deliver the world's first social enterprise square mile?

New Olympic contract wins could start a trend, says SEL's Allison Ogden-Newton

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• Allison Ogden-Newton
• Guardian Professional, Tuesday 10 January 2012 08.00 GMT
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The London Olympics could be good for social enterprises. Olympia/ Photograph: Arne Dedert/EPA

2012 starts with a bang as news breaks that social enterprise, Leisure Trust GLL, has won the landmark contract to manage the London Aquatics Centre and the Multi Use Centre (Handball Arena), whilst the development agency Renaisi, in partnership with Balfour Beatty and charity Groundwork, gets the contract to run the Olympic Park. These bids will deliver jobs and community regeneration and much more through entrepreneurialism that understands the importance of enhancing social value. There is a vision at work here and it is to make good on the promises of the legacy by supporting the most audacious community development any games has ever undertaken through the canny management of the site's assets.

That might sound like hype, but a closer look at the successful tenders show some very clever, ethically-driven plans to create jobs; giving local people a real stake in the facilities the games leave behind.

I spoke to Rob Pearce, Director at Renaisi, who told me that "We argued strongly that you will only get a great park if you create and involve successful neighbors and unless you create a specific mechanism, like a social enterprise, with that purpose in mind a park that inspires would be hard to achieve."

The community interest company "Our Parklife" that got the green light from the Olympic Park Legacy Company brings together co-curators Balfour Beatty, Renaisi and Groundwork. It will guarantee that jobs are created for local people and will ensure that a minimum of 50% of the supply chain contracts go to local small and medium-sized enterprises. It sets a clear vision for local integration and, like the GLL bid, creates a framework for a sustainable park where local communities will see real benefits.

GLL is another success story, and this latest landmark contract will mean a great deal to others in the social enterprise world given their strong social enterprise supply chain. Mark Sesnan, GLL's managing director told me they will "make a real difference", by working with other social enterprises. For example, GLL plan to work closely with transport specialists Hackney Community Transport (HCT), as well as London Recycling Network who have developed innovative recycling in East London and local social housing agencies. This will ensure that GLL's success supports other community based partners for a socially sustainable future.

HCT has been providing transport on the Olympic site for the last four years and its managing director Dai Powell told me he was delighted with today's news, adding: "When you look at the confidence public bodies and the public themselves are showing in social enterprises you realise that now is our time."

These latest contracts and other proposals, such as Business In The Communities plans to turn the 2012 Olympics Media Centre into a social enterprise business hub, all add up to the possibility of the world's first social enterprise square mile, set in London's Olympic park, post 2012.

I am sure the OPLC wants to make sure we don't get a games like Atlanta in 1996, where jobs failed to materialize, or Sydney in 2000 where the Olympic Park, set 18 miles outside the city, couldn't inspire a community to grow up around it and remains isolated and in a state of decline. Or, worse yet, Athens: where a failure to plan for any legacy missed every trick in the book with many of the facilities mothballed and jobs nowhere to be found.

It is fortunate that the 2012 games are set in the city that is acknowledged worldwide as the lead for social enterprise development. By choosing to back social enterprises based in London which innovate in regeneration, environmentalism and social impact, the OPLC has invested in a vision where a great games is just the starting gun ahead of the main event: a sustainable community where everyone is a winner.

Allison Ogden-Newton is chief executive of Social Enterprise London.

If money is too tight to mention, what can we talk about?

Necessity, as we know, is the mother of invention. Talking in recent weeks to London's local authority chief executives about their challenge to slash costs and mitigate the impact on service users and staff, I ask, can you do that and improve services?

It is unfortunate but perhaps inevitable that the greatest opportunity to innovate public services since their inception, comes when money's too tight to mention. As one local authority chief recently told me: "It's like trying to surf a tsunami, if we can hold on we might make it, but if we lose control, we'll go under." So is this really a good time to talk about social enterprise? Or would that make me the air stewardess trying to flog perfume during the emergency landing?

To put my view in context, I believe that inefficiencies are created when the government acts as buyer, seller and quality controller of services. It invariably gives the thumbs up to its own standards, errs on the side of generosity in setting prices and ends up paying more than it should. Into this Trinitarian formula we need at least one or two independent players. This does not devolve responsibility for provision from government, but it does allow them to design, purchase and assess services very differently.

Everywhere government is looking to save money by cutting and outsourcing, but before we scramble for the exits, can I offer the attractive alternative to privatisation? Social enterprise. Prioritising employee led services clearly run for the 'profit' of service users, not shareholders, reduces cost. These companies can put a value on staff by-in through such things as absenteeism, which is lower in social enterprise than the private and certainly public sectors. Greater efficiency de facto drives down cost and can improve quality.

Existing social entrepreneurs, like veterans, represent a real asset in these trying times. Mark Sesnan, managing director of GLL, and recent Government Pathfinder appointee, told me: "It feels like the 1980s when councils had to make big cuts, closing services everywhere, but we know now what we didn't know then, that there is an alternative in social enterprise."

It makes sense to work with and build on models like GLL which could collaborate on other forms of service delivery. After all, if leisure services can be successfully delivered the social enterprise way, why not libraries, or schools or children's services?

Social Enterprise London's recent publication Transitions, distributed across the public sector, and mentioned on Stephen Bubb's blogg this week, illustrates how services delivered by social enterprises have saved money, improved standards and achieved additional social impact. For example 'profit' in GLL, the UK's largest leisure social enterprise has been used to provide training for hundreds of long term unemployed young people. HCT bus services has similarly created local jobs and even a harm reduction bus that supports drug user rehabilitation. Ironically by making this about people not money, costs can be cut.

Conversely when private companies deliver state sponsored services they might or might not do a good job but they will always maximise profit, shareholders will be prioritised over service improvement or staff working conditions, and risk alongside responsibility will be upwards managed back to the state, a process reflected in the cost.

But what really matters is not the governance model but social impact and sustainability of the new provider. They will need governance that enables them to structure their finances so that they can deliver services that are paid for by results or have come through personal budgets, because these will be the new forms of payment. They will need to attract and retain the best staff and borrow because, even with a three or five year contract, they will have to expand to compete and survive. But it is possible to do all that and offer staff a stake in the business as Sunderland Homecare Associates does, or involve users in service design like Your Healthcare in Kingston, in effect, be social enterprises.

There are difficulties, however. The central message of big society, that people can do things for themselves, seems to have left public service providers to work out, on their own, what it means for them. Investment in sharing best practice has been cut alongside everything else, leading to reactive decision-making and lost opportunity.

So how can we shape the amorphous message of big society into a step-by-step transition where social enterprise emerges as the new service provider of choice? As Annie Francis of Independent Midwives UK says: "Government must introduce smarter, faster and more effective business support and encourage public services to genuinely engage with the [social enterprise] sector".

I urge the widespread distribution of Transitions and take up of its recommendation to work with local social entrepreneurs to establish champions and spread the word. With leadership that encourages people to chase savings alongside social impact I believe we can have a happy landing, even if it's been a bloody bumpy ride.

Published article in this weeks Guardian Public online