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Stephen Timms MPLaunch the London Activities of Street (UK) |
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It is a pleasure to be here this afternoon to help launch the London activities of Street (UK). As some of you here will know micro-finance has been of interest to me since my time as Financial Secretary at the Treasury and indeed before then. And it is still of interest to me now in my role as Minister with responsibility for social enterprise, at the DTI. The provision of micro-finance is an exciting form of social enterprise and it is particularly pleasing to see that Street (UK) has been supported by another very successful social enterprise, the Bromley-by-Bow Centre. Micro-Finance Enterprise can play a vital role in revitalising our poorest and most marginal communities. It helps to create jobs and stimulate activity in communities where crime and unemployment are high. It helps meet the basic needs of local people, by providing vital services like shops. Perhaps most fundamental, it helps develop self-confidence and determination in local people and communities - the real drivers of regeneration in the long run. Micro-finance has a crucial role in facilitating this regenerative enterprise. It can act as a bridge between the micro-entrepreneurs and the financiers. It provides finance for those who banks would not consider credit worthy or indeed profitable clients, allowing them to develop their capacity and credit rating to a point where they would become considered desirable clients by mainstream banks. I feel it does Barclays credit that they have had the vision to recognise this fact through their support for Street (UK), support that will be in Barclays business interest in the long run. Micro-finance packages are not handouts, they are in a very real sense hand ups. Structured loans can act to incentivise people up the ladder, allowing micro-enterprises to develop a track record in financial management and grow their businesses. They are loans not grants and a commercial rate of interest is charged. Social Enterprise Street (UK) and a number of other micro-finance institutions, therefore fit the government's definition of 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 profits for shareholders and owners." Given that this will be relevant not only to Street (UK) but also to many in this audience let me just say a very few words on what the Government is doing to encourage a thriving social enterprise sector as presented in our recently published strategy on social enterprise. There are three elements:
Create an enabling environment Government's role is to create the environment in which social enterprises can flourish. That does not mean giving social enterprise preferential treatment, but ensuring that the development and growth of social enterprise is not held back by inappropriate regulations or by exclusion from initiatives from which they could benefit. In particular we want to focus on the key issue of public procurement. For many social enterprises, delivering contracts, particularly for local authorities, is their core business. We want to open up public procurement opportunities even more to social enterprises. Make social enterprises better businesses Our second aim is to make social enterprises better businesses. We see two aspects to this – business support and training, and finance and funding. Business Support and Training Like any other business, social enterprises need access to good quality business advice and training. They have to meet financial and social 'bottom lines' and that can cause tensions and conflicts many mainstream businesses do not have to face. We want to work more closely with training providers to ensure that the level and quality of support for social enterprises available in some parts of the country is made available in every part of the country. We also want to make sure that the many DTI programmes for business are in practice welcoming to the social enterprises that could benefit from them. Finance and Funding The other aspect to making social enterprises better businesses is Finance and Funding. Social enterprises want to move away from grant dependency to earn income from trading. But it is hard. 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 (CDFI) in the UK have an increasingly important role to play in providing finance to social enterprise, as do micro-finance institutions. The DTI is currently supporting CDFI through the Phoenix Fund and I am also grateful to Street UK for its input into work on the shape of future Phoenix Fund support for CDFI. The Government is also committed to providing further support for CDFI through the Community Investment Tax Credit, introduced in the Budget this year– a tax credit that will just tilt the playing field in favour of financial viability for initiatives which would otherwise be marginal or slightly worse than marginal as investment prospects. The Tax Credit will be worth 25% of the original investment over 5 years – so, for example, a business making an initial investment of £100,000 would see a £5,000 reduction on the tax bill from other activities in each year of that period. And we are delighted that The Bank of England has agreed to review the provision of debt and equity finance to social enterprises. The review will cover CDFI, mainstream banks, business angels and venture capitalists. It will identify gaps or barriers and make recommendations on how these might be addressed. Establish the Value of Social Enterprise The last of the three strands of the social enterprise strategy is to establish the value of social enterprise. Social enterprise is not currently widely understood as a concept, although through events such as my recent weeklong tour of social enterprises across the country and our support of social enterprise awards - like Enterprising Solutions and Inner City 100 - we're increasing recognition of social enterprise in the wider business community. My tour confirmed to me that social enterprises are achieving great things. However, in this age of evidence-based policy-making, we need better data to persuade colleagues within Government, financiers and others of the size and value of the sector. So, one of our key priorities in this area is to commission research to provide evidence of the extent, diversity and impact of social enterprise. Street UK We have a lot to do, but we are confident that the net result will be that, as Street (UK) moves into its exciting next phase, there will be improved support in place to help ensure that it, like other social enterprises, can thrive and meet its full potential. All that remains is for me to wish you the very best of luck on that journey. |
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Other speeches by Stephen Timms MP
(the following are available from the archive) |
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