On 23 May prime minister David Cameron made a speech in which he sought to relaunch his vision of the Big Society. He stressed how important it was that local government delivered an increasing amount of its services through social enterprises.
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“This is a whole new way of looking at public service delivery,” he said. “By … calling on our charities, social enterprises and private companies to get involved we can build world-class public services that are engines of opportunity and that help build our Big Society.”
This is not new. Since the coalition came to power just over a year ago there has been mounting pressure on local authorities to embrace social enterprises.
However, what do local government officers think of this latest initiative? To what extent have they embraced the model and how much do they expect it to become a part of their working lives in the years ahead?
The greatest obstacle to the project was not internal opposition but the lack of suitable social enterprises
The first message to emerge from the LGC snapshot of sector opinion on social enterprise was that local authorities were getting the coalition’s message loud and clear, and that before this Parliament is out they fully expect to be delivering a greater proportion of their services through social enterprise.
While currently 83% deliver only 0-5% of their services through social enterprises, only 18% expect that by 2015 the proportion will have remained that low (see table, top). Very few respondents currently deliver more than 15% of their services via social enterprises, but by 2015, 17% expect the proportion to have reached that level.
They expect change in both the volume and type of services delivered in this way (above). Currently social enterprises look after social care at 53% of responding authorities, cultural activities at 40% and leisure activities at 33%.
By 2015 those percentages will remain around the same, apart from leisure (54%), but this delivery model is expected to have been adopted for education by 31% and for transport by 28%.
There are two main reasons why local authorities are so keen to embrace the social enterprise model, and they will surprise no one: 35% want to cut costs and 26% are looking to innovate in service delivery (above).
What is surprising, though, is just how well these outsourcing relationships seem to be working. As many as 55% find costs are reduced and 38% innovate. Furthermore, 41% find their citizens participating more, and an encouraging 47% find services are improved (below).
As Lucy Vaughan, transformation portfolio manager for Hammersmith & Fulham LBC’s school resources and learning disability services, puts it: “Social enterprises can reduce costs and encourage citizenship, but most of all this is a tremendous opportunity to rebuild trust between local government and the communities and people we serve.”
There may be many benefits from transferring service delivery to social enterprises, but there are also many hurdles to overcome.
Perhaps surprisingly, the greatest obstacle to the project was not internal opposition but the lack of suitable social enterprises, with 61% citing this reason.
It is also notable that 53% have had their attempts stymied by the lack of a financially viable model. There is clearly work here for social enterprises.
However, Ceri Jones, head of policy and research at the representative body Social Enterprise Coalition, believes that the onus is on local government to make itself more accessible to social enterprises.
“Factors such as contract sizes, lack of transparency of opportunity and prohibitive pre-qualifying questionnaires prevent social enterprises from engaging with local authorities,” she says.
Finally, legal compliance continues to be a difficult hurdle to clear - 31% have encountered legal complexity and 17% expect it to be an obstacle to greater adoption of the model. Yet, surprisingly, few seem prepared to bring in external expertise in this area. Only 18% expect to hire experienced social enterprise lawyers to help.
This may turn out to be a mistake. As Chris Brophy, partner at Capsticks, concludes: “Often our local authority clients don’t know what a successful relationship with a social enterprise looks like. We can help them understand how these organisations work, and how to draw up contracts that will get the best from them.
“This sort of sounding-board can be invaluable in ensuring that the relationship between local authority and social enterprise is a happy one.”
This article has been published to coincide with the launch of a new section on our website, LGCplus.com/SocialEnterprise, in association with Capsticks, the law firm specialising in social care and health.
The survey was commissioned by Capsticks and carried out by LGC with the report on the results independently written by LGC. For Capsticks’ comment, see Related Articles, right.