Post on 03-Jan-2016
transcript
Social Enterprises and Local Services
Uday Thakkar
uday@redochre.org.uk
www.redochre.org.uk © R
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Building the Big Society
The statutory sector is under considerable pressure to reduce spending
Alternatives are to cut services and/ or to increase efficiency of retained services
Many statutory bodies believe that they have probably reached the limits of internal efficiencies
Traditionally there has been a tendency to outsource services to big commercial contractors
Whereas this has been unpopular with employees and unions and increasingly the public (the voters) there is now a major political imperative to look at alternatives
..Public sector workers (will be given) a new right to form employee-owned co-operatives and bid to take over the services they deliver. This will empower millions of public sector workers to become their own bosses and help them to deliver better services”
What is Social Enterprise?
“A business with primarily social objectives 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” BiS
Charity
Commercial
What does this mean to statutory sector?
Services will be allowed to “Spin Out” i.e. existing services will be hived off into separate legal entities and the services purchased by the statutory sector from the “Spin Outs”
The new companies will employ former employees from the statutory sector
The companies will be mutually owned
They may or may not be social enterprises
Advantages:
Not seen to be privatisation or giving more to big business
Salvage jobs
Greater commitment from employees – in their interest to make a success
Ethos
Not strictly privatisation
Public service ethos maintained
Profit mainly reinvested
Potential of better rewards for employees
Top end salaries capped
History of successful spins outs
Advantages
Focus – on service delivery/ reduce bureaucracy
Control – employee ownership/ participation
Efficiencies – increased productivity/ increased commitment
Responsiveness – closer to user groups and nimbler response
Innovation – ability to experiment and generate new services faster
Reinvestment – continual improve and grow services
Expansion – no geographic restrictions
Sandwell Community Caring Trust – Then and Now
Staff sickness
Average 22 days p.a.
Now less than 1 day p.a. Saving £300-500,000 (no agency staff)
Staff turnover
Was between 20-30% p.a. - Now less than 4%
Management & Admin time
Constituted 22% of all resources - Now it is between 6-7%
Resources spent on front line delivery
Was 62% - Now is 85%
Cost savings
These are long term - not immediate
Privatisation can offer immediate and often greater direct savings
Many statutory bodies cannot or will not wait for the savings to materialise
How true are the savings?
FT reports that privatised services are not always more efficient or achieving the cost savings promised
Often cost savings are apparent initially but not in the longer term
Employment practices are suspect – hence union objections
No measure of the added benefits that social enterprises bring
Employment maintenance
Reinvestment
Localism
Challenges
New companies will not meet PQQ requirements
EU competition laws
Legal challenges
Lack of commitment/ understanding within management
Lack of entrepreneurial skills
Fear of the unknown
Job security
TUPE
Pensions
Government actions do not match the rhetoric
Future
Patchwork of delivery
Increasing number of hybrid structures:
Circle Health
Hammersmith’s education services
Tension between the promise of localism and cost saving
Increasing resentment to big business – A4E
More collaboration between Big Business and SE and increase in SE’s in the supply chain
Success predicated on political will at local authority level as well as central government
References
Social Enterprise UK – www.socialenterprise.org.uk
Red Ochre - www.redochre.org.uk
Transition Institute – www.transitioninstitute.org.uk
TPP Law – www.tpplaw.co.uk