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Northern Ireland Council for Voluntary Action (NICVA) Annual Conference Wednesday, January 22, 2003
Other speeches
(Click picture for biography)
Check Against Delivery I am delighted to be here and to be joining my good friend Ian Pearson on this occasion. I am already familiar with the strength and vitality of the social economy in Northern Ireland from my previous work as Parliamentary Private Secretary to Mo Mowlam when she was Secretary of State, and from my experience at the Treasury when I visited the NICVA two years ago as part of our work of preparing for that year's budget. It is great to be back - I always love visiting Belfast - and I am looking forward very much to finding more today about the latest developments in social enterprise in the province. Social enterprise is the focus of my visit today, but the UK Government places a very high value on the contribution of the social economy as a whole. We recognise of course that some organisations in the voluntary sector cannot realistically expect to become viable enterprises, but will continue to rely on grant funding and donations. Our increased support, for the Active Community Unit in the Home Office underlines our commitment to securing the full range of contributions from the voluntary sector as a whole. The sector has made a tremendous contribution - in NICVA's case over a 60 year period - and the exhibition at this conference highlights the extent to which that continues to be the case today. But there is a particular role for social enterprises and our ambition is for many more social enterprises to be established and for many more voluntary sector organisations to be able to deepen their independence and strengthen their enterprise activities. Social enterprises I would define as businesses with primarily social objectives and whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners. There are many of them, they have a very important part to play and we want to see many more. Their role is an important economic role as well as a social role. Social enterprises can play an important economic role in helping to drive up productivity and competitiveness, bringing for example people back into the workforce who have in the past given up on the hope of ever getting a job, and contributing to socially inclusive wealth creation. They can provide vital services in a community, which has not been well served in the past, and enable individuals and communities to work towards regenerating their areas. That is why responsibility for social enterprise lies with me in the Department of Trade and Industry, and here with Ian, in the Department of Enterprise, Trade and Investment - it is because social enterprise has a key economic importance. We overlook that at our peril. There are hard headed economic benefits, which we need to capture. So it is vital that we realise the potential of social enterprise. That means helping new organisations to start up, and helping existing voluntary sector organisations who want to increase the amount of their income earned through trading. The great potential of social enterprise lies in harnessing the skills and the creative energy of our entrepreneurial private sector at its best, and applying them to address the social challenges, which confront us at their toughest. Enterprise - entrepreneurship - has a great deal to offer and we are seeing more and more evidence of that potential being realised right around the UK. Tour Last autumn I travelled across England and Wales on a seven-day tour of social enterprises - 25 different enterprises from Cornwall and the Rhondda Valley to Newcastle and Hull, turning over between them £75 million and employing over 2000 people. I enjoyed it immensely and it was an object lesson for me in the potential of this sector. What I saw in those organisations is that many of the most talented people - the most entrepreneurial people - are looking for much more from their work than just a wage at the end of the month. They want to make our communities better places and they are applying their entrepreneurial skills to do so - and the results are pretty spectacular. That applies to large projects as well as small ones. I was deeply impressed by the stunning Eden Project in Cornwall, where Tim Smit's vision of Eden has produced 1,700 jobs in the South West and given Cornwall the third most popular paid attraction in the country, with tropical gardens under giant glass domes. It is transforming the economy in a part of the country that has been among the most hard-pressed in the past. Struggling hotels and boarding houses are being repainted and expanded. The project is focusing on buying food and other supplies from local firms - they invited 500 local firms to a supplier's conference and 478 of them turned up. Visitors are buying the local Cornish ice cream in vast quantities and not the national brands. The project did make one compromise though. They have refused corporate sponsorhip because they don't want visitors to feel the place is for sale. They refused at the beginning to let in the red Coke machines which you find everywhere in the world. Eventually a message came from Coca-Cola HQ - if we colour the machines green, will you let us in? And they said yes! And I asked Tim Smit what was the aim of the Eden Project. He said: "It is to change the world". This is ambition on a grand scale! And he summed up very well for me what the new commitment to social enterprise is about when he told me, and I quote: "People are fed up with Kum Ba Ya around the camp fire, but there is a huge number of people who want to put something back." Ands social enterprise gives them the chance to do so. But you can see just the same quality in far smaller social enterprises too. I visited a little enterprise called Vision 21 in Wales, who recently took over a small bottling and packaging facility from a private garden chemicals company, and employ people with learning disabilities to provide a commercial service. And I visited the Aberfan and Merthyr Vale Youth and Community Project in Merthyr Tydfil which now has a turnover of a third of a million a year. Jeff Edwards was a successful accountant in London and came back home to hear about the problems of unemployed young people. There were no jobs locally, and the jobs in the M4 corridor were too far away even by moped. So the project provides old Fiestas to unemployed people, charging them £15 a week for three months, by which time they can get a bank loan to buy a car. The project also trains up ex offenders and young people excluded from school to maintain the cars. And unemployment in Merthyr Tydfil has fallen from 27% to 7% since that project started. I am looking forward to extending my tour and seeing more examples by visiting social enterprises in Belfast today. I want to see for myself social enterprises meeting their double, and, in some cases triple, bottom lines of social, economic and environmental goals. And I know that I will be every bit as impressed as I was during my visits in the autumn. National Strategy So because we recognised this potential, Patricia Hewitt, the Secretary of State for Trade and Industry, and I launched our ambitious strategy for social enterprise last July. We set out a three-year programme to show how, working with others, we will promote and sustain social enterprise activity. The strategy highlighted a number of past barriers to the growth of the social enterprise sector. Our aim is to tackle these barriers and to achieve four key outcomes:
To create an enabling environment for social enterprises To make social enterprises better businesses To improve availability of Finance and Funding To establish the value of social enterprise Some actions in the strategy will be led by us in the UK Government, working in partnership with others. Others will be taken forward here by the departments in Northern Ireland. And I am delighted by what Ian had to say about development of a strategy for Northern Ireland. I want to stress, as Social Enterprise: a strategy for success does, that we cannot achieve alone our vision of dynamic and sustainable social enterprise. We need to work with colleagues across governments and with individual social enterprises and support organisations, to deliver the strategy's goals. Making Sure It Happens We are taking steps to make sure that the strategy is implemented. We have an interdepartmental official group, which monitors implementation across Government, including a representative from the Social Economy Unit in the Department of Enterprise, Trade and Investment here. We've also established an Implementation Group of external stakeholders - key practitioners, intermediaries and others involved - who will be able to contribute continuously to the monitoring and review of the strategy. We have now a better-resourced Social Enterprise Unit within the Department of Trade and Industry, which will act as a focal point and co-ordinator for social enterprise policy. Many of the actions we're taking forwarded are, at this early stage, primarily focussed in England. But I'm very much looking forward to being able to say that there is a complementary body of work going on in Northern Ireland under the new strategy for the social economy. I want us to work together - exchanging ideas and best practice and learning from each other's experiences. Let me now set out what the strategy consists of under the four headings I referred to. Create An Enabling Environment First, creating an enabling environment. We want an environment in which social enterprises can flourish - to ensure that the development and growth of social enterprise are not held back by inappropriate regulations or by exclusion from initiatives from which they could benefit. We are also interested in providing a more supportive legislative environment for social enterprises. So we are working with other Government departments to take forward the recommendations of the Cabinet Office's report Private Action, Public Benefit. It proposes reforms to Charity Law, to the legal basis for Industrial and Provident Societies and also a new legal form, the Community Interest Company. The Community Interest Company is going I think to be a very significant development. It will be a legal form for social enterprises wishing to incorporate as not-for-profit-distribution companies. A team in the DTI is developing the concept and looking at whether its creation would lead to a strong new brand for social enterprises. We also want to focus particular attention on the key issue of public procurement. Social enterprises can and do win Government contracts to deliver services and are successfully delivering public service contracts across the country. They have competed for these contracts, and won them - often against private sector contractors - because they can deliver excellent value for money. They can provide the right service, at the right quality, at the right price. But I believe there is potential for many more public services to be delivered by social enterprises. We want more of that potential to be realised, and we are adopting a two-pronged approach to achieve it:
On the one hand working to promote greater understanding of social enterprises on the part of public sector procurers On the other increasing expertise on procurement and disseminating best practice within social enterprises Some from Northern Ireland took part in the conference in London last October on procurement where I highlighted the work we're begun in this area. The Small Business Service and the Office of Government Commerce have already published guidance both for procurement officers - with the publication Small Supplier ... Better Value? - And for social enterprises - Tendering for Government Contracts. We are planning to do more, and to develop a procurement toolkit for social enterprises and their advisors, building on existing expertise and knowledge, to help social enterprises win public sector business. This work has just got started, we expect it to be completed by the summer, and we're discussing with the Department of Enterprise, Trade and Investment how we may be able to work together to deliver it. Making Social Enterprises Better Businesses Turning to the second key outcome in the strategy - making social enterprises better businesses. We want to make sure that social enterprises can get access to the business advice and support which can help them. Like any business, social enterprises need access to good quality advice and training. Social enterprises have not always been able to gain access to the support, which is available for other small businesses. So we are working with providers to ensure that appropriate services are available and that their take up among social enterprises is increased. For example, through the Small Business Service, we will ensure social enterprises in England can access services provided by their local Business Links, and encourage them to do so. The strategy that the Small Business Service has been developing has social enterprise as a clear priority and this will mean that, in future, each Business Link will have to say clearly in its Business Plan how it intends to support social enterprises, how it will deliver, and what steps it will take to increase take up. As important as Business Links are, we know that there are specialist elements that are better offered by those immersed in social enterprise. So we are working with the sector to encourage the provision of practitioner-led training events too. And, of course, social enterprises like any other small business should be able to benefit from DTI programmes, which support businesses. Finance And Funding Thirdly, social enterprises need to be able to access appropriate finance and funding. We want social enterprises to move away from grant dependency and towards greater self-financing. But they can hit problems. Financial institutions do not always understand what a social enterprise is, or how to assess the risk involved, so some remain unwilling to lend.
Community Development Finance Institutions - CDFIs - have an increasingly important role to play in providing finance to social enterprise across the UK. The Community Investment Tax Relief was developed in the Treasury when I was there before the last election and introduced into legislation in last year's Finance Bill following an announcement in the Budget. I think it is going to be very important in just tilting the playing field in favour of commercial viability for a range of valuable initiatives in disadvantaged areas, which would not quite be viable without it. It will operate across the UK and provide tax relief of 5% per annum over 5 years to investors who invest in an accredited CDFI. So an investor investing £100,000 will be able to reduce their tax bill from other activities by £5000 per year for five years. The CDFI then in turn lends to or invests in a qualifying profit-distributing enterprise or community project. This is a pioneering initiative, encouraging investors to invest in some of the UK's most deprived communities and providing social enterprises with an expanded source of finance through accredited CDFIs. I want to see enterprises in Northern Ireland taking advantage of it. It is very unusual for the Treasury to introduce a tax relief of this kind, and the fact that the Chancellor has decided to do so bears witness to the Government's commitment to growing the social enterprise sector across the UK. We are participating in a review being carried out by the Bank of England of the debt and equity finance available to social enterprises. We intend to take forward in England recommendations to address any gaps or barriers identified by the Bank. The results of the review are likely to be of interest in other parts of the UK too. And because the Bank of England is carrying out the work, we are confident that the conclusions will be taken seriously by key City institutions too. Finance is not simply about supply - we need to look at the demand side too. There is a lack of financial awareness among many social enterprises - they do not know what finance possibilities are open to them and how these can be accessed. In England, we are working with the Small Business Service, banks and with partners in the regions to develop a series of financial awareness training seminars and support materials to help social enterprises better manage the move towards greater self-financing. Establish The Value Of Social Enterprise Fourthly and lastly, we want to establish a much better understanding of the value of social enterprise. My tour confirmed to me that social enterprises are achieving great things. They make a significant and distinctive contribution to our economy and are improving the lives of people across the UK in a range of different ways. They are showing what entrepreneurial thinking, combined with concern for the environment and social change, can achieve, each of them adopting unique and innovative ways to achieve their aims. But at the moment, social enterprise is insufficiently understood as a concept, and, although there has been valuable work at regional and local levels, its current and potential contribution to the national economy is not as yet supported by an adequate evidence base. So improved data is needed on the scale and impact of the social enterprise sector across the UK. We need better data to persuade officials within Government, financiers and anyone considering setting up a social enterprise of the value of the sector. Better data is also needed so we can assess the impact of the new social enterprise strategy. We are working at the moment on guidance on mapping social enterprise. Once we have that, we will commission research to establish baseline data about the social enterprise sector at a national level - its size, its contribution to the UK economy and the number of people it employs. I think that is going to be very helpful in getting our message about social enterprise across. We are also working hard in other ways to raise awareness of the sector and to celebrate its successes across the UK. We sponsored alongside NatWest and the Royal Bank of Scotland last year's Enterprising Solutions National Social Enterprise Award. I was delighted to be able to present the top prize to Brighton and Hove Wood Recycling Project, a comprehensive timber collection service. As well as providing a boost to the winners and finalists, this type of event is helping to raise the profile of social enterprise more widely and increase recognition of it in the wider business community. You may have heard of the Inner City 100, which celebrates the fastest growing businesses in inner city areas. One of the firms in my social enterprise tour was Sheffield Rebuild, which both trains young people entering the construction industry and provides building services to social housing providers in Sheffield. Sheffield Rebuild won the special social enterprise award, which we sponsored for the first time this year in the Inner City 100 awards. In the past there have been parts of the country where it was taken for granted that you would never get a job. We are determined that that will change and that, building on the new stability in the economy which we have achieved in the past few years, we will see in every community the real prospect of full employment and that there will be a new spirit of enterprise in every part of the country. Social enterprises are a key piece of the jigsaw for making that happen - providing vital new services for communities as well as jobs. Developing the new social economy strategy for Northern Ireland will bring opportunities for us to work together and learn from each other, for the benefit of all parts of the UK. I and my colleagues in Scotland and Wales and in the regions of England will be watching with great interest the developments outlined by Ian earlier on. I'm absolutely confident that we will together identify measures to realise much more of the potential which all of us at this meeting know social enterprise holds out for us.
Thank you for what all of you are doing. Let's work together now to bring about a stronger social economy, to deliver the kind of changes in our communities that all of us want to see. Thank you.
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