As Government strives to bring contestability and choice in to the provision of public services, so the range of models for delivery has multiplied. To the now familiar public-private partnership and joint venture structures, we must add the social enterprise model. The Department for Business Innovation and Skills defines a social enterprise as “a business with primarily social objectives whose surpluses are principally reinvested in the business or community, rather than being driven by the need to maximise profit for investors and owners.”
Social enterprises will combine a vision of strong social purpose with entrepreneurial drive. They will be robust businesses that are highly responsive to customers and service users, competing in a marketplace, but driven by a public service ethos and a commitment to social goals and values. The Government sees social enterprises as a key tool to boost the economy, as well as pursuing social justice, community engagement and empowerment.
The social enterprise could come about in a number of ways. A public authority may decide to externalise the provision of a particular service to a newly created notfor- profit body, as has happened with leisure trusts. Alternatively, an existing charity or not-for-profit organisation might sponsor the formation of a body to provide new services. For example, a housing association might sponsor a new nursery, or a group of entrepreneurial and forward-thinking public sector managers might form a new entity which spins out an existing service, as is beginning to happen in the health and social care arena under the ‘right to request’ policy. These individuals are sometimes known as social ‘intrapreneurs’.
The conditions are ripe for the emergence of new social enterprise models across a range of public services ranging from primary healthcare, to education, childcare, social care and offender management services. There have been a number of recent Government announcements and publications reviewing the role of the voluntary sector in public service delivery. These include Public Services and the Third Sector: Rhetoric and Reality – Government Response, Public Services Action Plan: Two Years On and most recently ‘Public Services and Civil Society Working Together’ published by the Young Foundation. The Government sees voluntary and community organisations (the “Third Sector”) as having a crucial role to play in service delivery. Often third sector organisations can add real value by specialising in particular user groups, by being closer to their stakeholders and through enjoying specialist knowledge, flexibility and innovation in the delivery of services.
One of the key decisions that any budding social entrepreneurs or sponsoring authority will need to make early in the process is: which legal structure to use for the business? There is a bewildering array of possible formats for social enterprise. Each has its own advantages, disadvantages and quirks. At TPP Law we have been fortunate enough to work with many dynamic individuals and organisations in helping to create cutting-edge sustainable social businesses which deliver essential public services. These have been as diverse as residential care, primary healthcare services, disability support, childcare, leisure services, offender management services, community regeneration and renewal. The first edition of this guide was born out of the continuing thirst for knowledge on this topic from our clients and contacts and the need for a concise guide which can provide a handy reference for the busy executive. Now in its second edition, we have updated the text to cover recent legislative developments, such as the entry into force of the Charities Act 2006 and developing Government policy in this area.
