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Last updated: 13 May 2009
The government has set out plans to put social enterprises at the heart of its drive to create new jobs and business through the downturn and deliver public services more effectively.
Liam Byrne, Lord Mandelson and others
at the summit.
In three days of announcements including the summit and a breakfast with the Prime Minister, Secretary for Business Lord Mandelson, Minister for the Cabinet Office Liam Byrne, Communities Secretary Hazel Blears and Secretary for Work and Pensions James Purnell announced a package of measures to help social enterprises to boost the economy, create jobs and impact on the reform of public services.
Minister for the Cabinet Office Liam Byrne said:
“In tough economic times, the contribution – the ideas, innovation and energy – of social enterprise will become ever more important, for jobs, for enterprise and for public services.
“I want to see social enterprise at the heart of government, planning for building Britain’s future and delivering better public services. I will be chairing a new Ministerial Working Group including Ministers from DWP, the Department of Health and the Ministry of Justice, to ensure a level playing field for social enterprises competing for public service contracts. We’re going to take out the barriers faced by social enterprises, and encourage more to come forwards with innovative and better ways of delivering public services.”
Secretary of State for Business Lord Mandelson said:
“Community Development Finance Institutions play an extremely important role supporting small businesses and social enterprises in disadvantaged areas.
“In the current economic climate, these institutions are an increasingly important source of finance and investment for small businesses and social enterprises that have been unable to access finance from banks. These changes to the Enterprise Finance Guarantee Scheme will enable more of these institutions to raise additional lending worth up to £20m.”
Secretary of State for Work and Pensions James Purnell said:
"We will not abandon a generation of Britain's young people to the unemployment scrapheap. The £1bn Future Jobs Fund will create 150,000 new jobs, and we want social enterprises to get their share of this money to help them go from strength to strength.
"We want social enterprises to create at least 15,000 new jobs to help the next generation of social entrepreneurs get started. We want to give young people the chance to work and make real difference, by funding new jobs in companies working to build a better Britain. These jobs will help creative, committed people get the skills they need to be the social entrepreneurs of the future."
Secretary of State for Communities Hazel Blears said:
“Younger people deserve every possible chance to find a job after school but sometimes they need some extra help to reach their full potential and that is where social enterprises, like the Hoxton Apprentice, can give them a leg-up onto the career ladder.
“Social enterprises are ideally placed to play a leading role in the grassroots jobs campaign our jobs fund aims to create.”
“We want to see social enterprises coming forward with ambitious proposals to stimulate new jobs that transform our communities and perhaps even find the next Jamie Oliver or Marco Pierre-White.”
The lessons from the Summit will be taken forward across Government through a new cross government social enterprise policy forum. And we are inviting other government departments to bid to help build evidence on how social enterprise can contribute to solving their policy priorities.
A short report reflecting the discussion at the Summit will be available on OTS website by the end of the week.
Package of measure announced:
Boosting jobs
Boosting enterprise
Boosting public services
Future Jobs Fund
The Future Jobs Fund was announced by the Chancellor in this year's Budget.
Communities Secretary Hazel Blears and Work and Pensions Secretary James Purnell today announced with the Prime Minister, from 10 Downing Street, that social enterprises must play their part in tackling the economic downturn by creating at least 15,000 new jobs for the unemployed [External website], funded by the Government's £1bn Future Jobs Fund.
The Fund is now open for http://www.dwp.gov.uk/campaigns/futurejobsfund/index.asp [External website]
The Enterprise Finance Guarantee is a £1bn loan guarantee scheme delivered through the banks that will enable an additional £1.3bn of lending to businesses up to end March 2010. EFG provides a 75% government guarantee on individual loans to viable businesses with less than £25m turnover. It can be used to support new loans, refinance existing loans where the loan is at risk due to the deteriorating value of security or to convert part or all of an existing overdraft into a loan to release capacity to meet working capital requirements. EFG is open to businesses with an annual turnover of up to £25m seeking loans of £1,000 through to £1million, repayable over a period of up to 10 years.
The changes BERR has made today allow for an EFG guarantee on capital lent to the CDFI by accredited lenders. This would effectively provide a guarantee at the level of the CDFI’s lending to SMEs. By providing this greater level of security to the banks that their capital loan to CDFIs can be repaid we expect to encourage up to £20million of additional loans to the CDFI sector.
Community Development Finance Institutions (CDFIs) are independent financial institutions that provide loans to businesses, individuals and social enterprises in disadvantaged areas and who are unable to raise finance from mainstream lenders. There are between 70 – 80 in the UK the majority are Industrial and Provident Societies or Companies Limited by Guarantee. The CDFIs’ Trade association (the CDFA) publishes Inside Out, every two years. The most recent available data on CDFI activity (covering up to 2007) was published in March 2008. It reports that the sector had onward invested £287m, created and sustained 33,000 jobs and levered an extra £330m of finance into the businesses and households it serves.
Government has launched a range of Real Help for Business in the current situation. I attach All measures offering real help for small business can be accessed via the Business Link portal:
Social Enterprise Access to Investment programme
This Social Enterprise Access to Investment programme will be run by the National Endowment for Science, Technology and the Arts (NESTA) and is jointly funded by the Office of the Third Sector in the Cabinet Office.
The programme will run for one year to provide insight into how Investment Readiness Providers (IRPs) that provide advice and brokerage for social enterprises may be sustainably financed in the future. This aims to increase the quality of social enterprise investment proposals; their chances of success; and the appeal of social enterprises as investment vehicles.
While, Social Enterprises can benefit from a wide range of financial products they are not always able to access the finance appropriate for them. Evidence suggests that this might be due to the fact that many SEs are not always investment ready and can have low levels of financial literacy. This translates into higher transaction costs for investment in these organisations.
According to research undertaken, there is a lack of appropriate financial advice for social enterprises and existing advice is often targeted at mainstream businesses.
One of the key features of the programme is a success fee that will incentivise ‘brokers’ of advice to help social enterprises access funds. These fees will be performance based and only payable to investment readiness providers in the event of social enterprises successfully accessing risk capital. The aim is to adopt the model of success fees proven in other markets in the developing capital market for businesses driven by more than just the financial bottom line.
For further information on the Social enterprise Access to Investment programme, please call the Cabinet Office Press Office on Tel: 020 7276 1196, out of hours telephone 07699113300 and ask for pager number 721338 - http://www.cabinetoffice.gov.uk/
Guide to Social Return in Investment
The Office of the Third Sector (OTS) is running the Measuring Social Value project, which is being taken forward over 2008-2011. The project is being run by a consortium led by SROI UK, with New Philanthropy Capital, New Economics Foundation, Charities Evaluation Service and National Council of Voluntary Organisations as members. Further details on the project can be found on the Office of the Third Sector’s website.
The project is running alongside a complementary project funded by the Scottish Government's Third Sector Division (TSD). The Scottish Government’s project [External website]has responsibility for the development of a SROI portal and of new training materials for practitioners.
The SROI Network is a network dedicated to the consistent and effective use of SROI. It is a membership organisation with members who are practitioners, academics, funders and investors with an interest in the use and development of social return on investment. The growing membership is led by accredited practitioners who have pioneered SROI in England, Ireland and Scotland. More information can be found at the SROI Network website [External website]. For further information please email info@sroi-uk.org
The new guide on Social Return on Investment (SROI) will help charities, social enterprises and all organisations with a focus on social and environmental value to communicate their impact effectively to customers, government, public service commissioners, investors and the wider public.
For commissioners, SROI can be used initially as a way to help them decide where to invest, and later to assess performance and measure progress over time. As part of phase two of the National Programme for Third Sector Commissioners, we are committed to working with SROI as part of the training programme.
For investors and funders, SROI can help them gain a better understanding of the social and environmental value they seek.
Tel: 020 7276 0317 – Fax: 020 7276 0618
http://www.cabinetoffice.gov.uk/
Out of hours telephone 07699 113300 and ask for pager number 721338