A report on the importance of social enterprise to the UK economy has been drawn up, as the sector lobbies for a greater role in the country’s future.
The Hidden Revolution report, from the Co-op Group, Nationwide Building Society and Social Enterprise UK, uses new methodology to estimate the value of social enterprise.
Announcing the report on his blog, Co-op Group chief executive Steve Murrells said: “Businesses like our Co-op, Nationwide and 100,000 smaller organisations are generating £60bn into the UK economy – which is 150% more than previously thought.
“Together, we employ 2 million workers. That’s the same as all of the creative industries in the UK combined. We’re going to use the new research to lobby for changes in government policy that will encourage further growth of the sector.”
The report says the £60bn figure represents 3% of UK GDP – three times the size of the agriculture industry– and 5% of employment – as many jobs as the creative industries sector.
It adds that they are “fairer, more diverse and serve our customers to a higher standard. For example, social enterprises in health and social care are consistently outperforming both public and private sector counterparts when it comes to patient feedback ratings, staff engagement and service user feedback, national patient surveys and financial performance”.
And it reveals that the sector outstrips conventional business when it comes to innovation: the number of social enterprises introducing a new product or service in the last 12 months stands at 50% compared to SMEs overall which is 33%.
It also performs better on paying fair tax, says the report: “With our focus on wider society, we are proud to be rooted in our communities, paying our taxes right here in the UK. For example, Britain’s top five co-operatives pay more tax than Amazon, Facebook, Apple, Ebay and Starbucks combined.”
The report calls for:
- mutuals, co-ops and social enterprises to to be given a greater role in public services
- all public sector procurement to be influenced by social value by 2025
- new company law and improved regulation to give greater regard to the social potential of business and investment
- using £2bn of untapped dormant assets, such as unclaimed insurance and pension funds, to enable communities to take greater control of their local economies
- the Treasury and Department for Business, Energy and Industrial Strategy to invest in a more inclusive economy
- teach about social enterprise, mutuality and co-operation in business schools, in primary, secondary, higher, further and tertiary education
- a review of how the tax system rewards entrepreneurs and businesses driven by a social mission.
Mr Murrells said: “Politicians from all the main parties have recognised that we need to make profound reforms to the way we run the economy. Theresa May has called for a more ‘responsible capitalism’. Jeremy Corbyn has said he wants to replace the current ‘failed model of capitalism’. Sir Vince Cable has said that capitalism needs a ‘makeover’.
“It’s clear that the public wants change too. Polling commissioned by the Legatum Institute last year found that the top three words associated with capitalism by the public are ‘greedy, corrupt and selfish’.”
He said co-ops and other social enterprises offer “a better way of doing business”.
“Our Co-op has always been run for the benefit of our millions of members,” he added, “and that’s why we can plough our profits back into local communities up and down the country.
“At a time when there’s global concern about the transparency of big business, our ownership model has democratic accountability built into it. The UK would benefit greatly from more businesses that are run for a social purpose and where long-term sustainable decision making is the norm.”
This will feed into a broader application of co-op values to the way the UK is run, Mr Murrells hopes.
He said: “I’m thinking of how we run our communities and our schools; how we approach a post-Brexit economy for the UK; how we make trade relationships fair at home and abroad; and how we tackle climate change globally. We must adopt co-operative ways of working to solve the challenges we face in ways that achieve a common good.”
