Yet again on my doorstep I see 'juicy' contracts awarded to purely commercial businesses against competition from social enterprise. I have written bids in both the socent and commercial sectors, and have evaluated bids and awarded contracts as a commissioner, so I know more than a little about this. Social enterprise is still being held back, and the social value bill will make little difference.
When constructing a bid, a commercial bidder will look at the base cost of delivering the service and do so from the point of view of minimum staff costs, stripping out all unnecessary costs and investments, and in taking their targeted profit. If they win the contract and the inherited staff or service levels do not support their profit requirement they simply throw out whatever is overweight to ensure that they do not lose out. Even if a social enterprise bid is measured on its promise of returning profit or investing it is unlikely to win against the purely commercial bid. A social enterprise will not plan to reduce service quality or to treat staff badly by moving their bases just far enough to make sure they leave but not far enough to require any help with resettlement. Instead, if a social enterprise thinks the contract comes with surplus staff it will cost in proper redundancies and include these in it's bid. There are many similar ways that the playing field is just not level.
In retail services, those sold direct to the public, social enterprises have even more difficulty, in that just about anyone can make themselves look 'social' if they want to and to make a true social offer takes a lot of marketing space. John Lewis is often mentioned as a social enterprise, and people trade with it because of its status, but I would argue that it is not social. Trading for the benefit of your employees is natural and welcome, but it does not make you social. Only trading for a wider community can do that.
What do we do about all of this?
One of the outcomes of the research which underpins my Unofficial Big Society Green Paper is that social enterprise needs a defining mark. I'm not sure that 'Society Profits' (the brainchild of Social Enterprise UK http://www.socialenterprise.org.uk/) is it, as who can use it, and how it is used, are the responsibility of an organisation to both create the rules and police it. To gain real public trust social enterprise needs a legally-defined state of existence marked apart from purely commercial businesses by a distinct company marker, like ltd and plc.
This would do three things. It would create public trust and would enable easier measurement of the size and impact of the sector. It would also enable a market to be made in purely social shares and provide a way for philanthropic individuals to easily invest in a range of businesses and measure the returns that they make and/or receive.
Obviously, any truly social enterprise would find it much easier to connect with its community if it could trade in this way and it would also help when bidding for contracts, as the return of profit and reinvestment promised in a bid could be part of a much more structured arrangement. I would also encourage all social enterprises when bidding for state contracts to construct two pricing scenarios. One the bare minimum cost, treat everyone badly, drop anything unprofitable offer that is common in the commercial world, and the other their own bid. This will show commissioners that they have considered where the cuts can be made, and how cheaply things could be done if the basic rules of a civil society are ignored, but that they will do it differently. It goes without saying that the closer together that the two costs can be brought, the higher the chance of winning the bid. All of the 'gap' however could be argued to be of social value, and by constructing two prices it will be easier to identify where the cost of that added value is. Explaining the cost of it, perhaps even making it an optional part of the bid, will help commissioners to justify awarding the contract even if the socent is not the lowest bidder.
The Government has of course done very little to help social enterprise. The sector is poorly defined, impossible to measure and yet it should be the cornerstone of the Big Society. The social value bill was not even a government bill and yet it is the only tangible support for the sector apart from a new 'bank' created by co-ercing money out of other banks. Although it would risk the ire of capitalism please be brave and give social enterprise a proper central place in society and it will repay you a thousand fold by making society big.
