1.
Social enterprise and public service delivery John Maddocks

2.
Changing service delivery landscape <ul><li>Health </li></ul><ul><li>Localism </li></ul><ul><li>Personalisation of social care </li></ul><ul><li>Big Society </li></ul><ul><li>Public Service Reform </li></ul><ul><li>“… support the creation and expansion of mutuals, co-operatives, charities and social enterprises, and enable these groups to have much greater involvement in the running of public services” </li></ul><ul><li>(The Coalition: Our Programme for Government) </li></ul>

3.
Social enterprise - definitions <ul><li>‘ … a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community ...’ </li></ul><ul><li>DTI 2002 </li></ul><ul><li>‘… social enterprise if: </li></ul><ul><li>the person or body is carrying on a business ; </li></ul><ul><li>the business’s activities are being carried on primarily for a purpose that promotes or improves the social or environmental well-being …; </li></ul><ul><li>the greater part of any profits for distribution is applied for such a purpose .’ </li></ul><ul><li>Public Services (Social Enterprise and Social Value) Bill </li></ul>

4.
A social enterprise … <ul><li>Undertakes trading activities (50% > of income) </li></ul><ul><li>Has a social purpose </li></ul><ul><li>Profits are reinvested (50% > reinvested) </li></ul><ul><li>= social enterprise </li></ul><ul><li>Independent </li></ul><ul><li>Asset lock </li></ul><ul><li>Accountable for social goals </li></ul><ul><li>= social enterprise mark </li></ul><ul><li>Participatory structure? </li></ul><ul><li>= participatory social enterprise </li></ul>

5.
Main types of ‘social enterprise’ <ul><li>Charities that trade </li></ul><ul><ul><li>Annual earned income approx £17.5bn </li></ul></ul><ul><ul><li>Shift from grants to contracts </li></ul></ul><ul><li>Community interest companies </li></ul><ul><ul><li>Over 4,600 community interest companies </li></ul></ul><ul><ul><li>Number is growing rapidly </li></ul></ul><ul><li>Mutuals </li></ul><ul><ul><li>Turnover approx £100bn </li></ul></ul><ul><ul><li>1million employees </li></ul></ul><ul><li>Co-operatives (part of mutuals) </li></ul><ul><ul><li>Turnover approx £33bn </li></ul></ul><ul><ul><li>Over 4,900 co-ops in UK </li></ul></ul>

6.
Variety of legal structures <ul><li>Including: </li></ul><ul><li>Company limited by guarantee </li></ul><ul><li>Company limited by shares </li></ul><ul><li>Company limited by guarantee & registered charity </li></ul><ul><li>Company limited by guarantee & registered CIC </li></ul><ul><li>Company limited by shares & registered CIC </li></ul><ul><li>Industrial & Provident Society- for benefit of community </li></ul><ul><li>Industrial & Provident Society- bona fide co-op </li></ul><ul><li>Limited liability partnership </li></ul><ul><li>Charitable incorporated organisation </li></ul><ul><li>Charitable Trust </li></ul>

7.
Different structures different characteristics <ul><li>The results of choices made over legal structure and rules will be seen longer term. It impacts on: </li></ul><ul><ul><li>Regulation </li></ul></ul><ul><ul><li>Governance </li></ul></ul><ul><ul><li>Property rights </li></ul></ul><ul><ul><li>Financing </li></ul></ul><ul><ul><li>Trading </li></ul></ul><ul><ul><li>Tax </li></ul></ul><ul><ul><li>Accounting </li></ul></ul><ul><ul><li>Participation </li></ul></ul><ul><ul><li>Long term purpose </li></ul></ul>

8.
Types of governance <ul><li>Self selecting - Just the governing body and no wider membership </li></ul><ul><li>Democratic – Open membership (involving one or more stakeholder groups) elect governing body </li></ul><ul><li>Hybrid – governing body appointed by another body and/or % of places allocated to particular stakeholders, or some other mix of selection and appointment </li></ul>

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Differing characteristics - examples Footnotes: 1. Co-ops and companies able to revise asset lock terms in their governing documents 2. Can issue member shares if not a company limited by guarantee Characteristic Charity Co-op CIC Open membership Optional Yes Optional All surpluses retained Yes Optional Optional Asset lock Yes Yes, but 1 Yes Charitable status Yes No No Issue member shares No Yes, if 2 Yes, if 2 Tax advantages Yes Limited No

10.
Sandwell Community Caring Trust <ul><li>Charity - company limited by guarantee </li></ul><ul><li>Initial funding £1.2m (previous year £1.6m) </li></ul><ul><li>Initial 5 year contract </li></ul><ul><li>Reduced number of managers </li></ul><ul><li>Reduced spending on admin </li></ul><ul><li>Increased spending on service delivery </li></ul><ul><li>Culture of valuing staff </li></ul><ul><li>Low absenteeism </li></ul><ul><li>Low staff turnover </li></ul>

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Sunderland Home Care Associates <ul><li>Initially CLG – 20 members £1 share each </li></ul><ul><li>Changed to CLS to allow for share allocations </li></ul><ul><li>Shares distributed to employees in two ways: </li></ul><ul><li>Annual free allocation linked to salary </li></ul><ul><li>Annual sale </li></ul><ul><li>Board includes 5 employees (3 year term) and tax/legal expert </li></ul><ul><li>360 employees </li></ul><ul><li>£3.5m turnover </li></ul><ul><li>£168,000 pre tax profit (2009) </li></ul>

12.
North West Housing Services <ul><li>Industrial & Provident Society bona fide co-operative </li></ul><ul><li>Formed by a consortium of 38 independent organisations </li></ul><ul><li>Now has 46 member organisations </li></ul><ul><li>Provides professional services to housing co-operatives, small housing associations, leaseholders and social enterprises </li></ul>

13.
Greenwich Leisure Limited (GLL) <ul><li>Industrial & Provident Society for the benefit of the community </li></ul><ul><li>Oversees the management of over 100 public leisure centres, including swimming pools and gyms within London and South East England </li></ul><ul><li>The board has representation from a number of stakeholders including: </li></ul><ul><ul><li>customers </li></ul></ul><ul><ul><li>council </li></ul></ul><ul><ul><li>staff </li></ul></ul>

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Carn Brea Leisure Centre Trust <ul><li>Initially LA run </li></ul><ul><li>Transfer to an external contractor </li></ul><ul><li>Closed </li></ul><ul><li>Reopened as charity – company limited by guarantee </li></ul><ul><li>Income £1.3m (2010) </li></ul><ul><li>90+ employees </li></ul><ul><li>Trustees elected by membership </li></ul>

15.
Central Surrey Health <ul><li>Social enterprise formed in 2006 </li></ul><ul><li>Company limited by shares </li></ul><ul><li>Co-owned by 700+ employees </li></ul><ul><li>Delivering community nursing and therapy services </li></ul><ul><li>Previously within PCT </li></ul><ul><li>In NHS pension scheme </li></ul>

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Bromley Healthcare <ul><li>Company limited by shares & CIC </li></ul><ul><li>800+ delivering community health services </li></ul><ul><li>Staff and local GPs all have shares </li></ul><ul><li>Cannot trade shares </li></ul><ul><li>Cannot own more than one share each </li></ul><ul><li>Board of directors </li></ul><ul><li>Council of governors </li></ul><ul><li>Community Forum </li></ul>

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Bucks Urgent Care <ul><li>Limited Liability Partnership </li></ul><ul><li>Consortium of two GP provider companies and a national provider of out-of-hours medical services </li></ul><ul><li>Won contract in 2009 to provide specified health services for the population of Buckinghamshire including: </li></ul><ul><ul><li>an out-of-hours service </li></ul></ul><ul><ul><li>a GP-led Health Centre </li></ul></ul><ul><ul><li>a dedicated Admissions Avoidance Team to respond to requests from care homes for urgent medical advice </li></ul></ul>

18.
Iceni Partnership <ul><li>Charity - company limited by guarantee </li></ul><ul><li>Received £3.85 million EU funding to develop two community asset buildings, redesign the town centre and to provide community cohesion projects and events </li></ul><ul><li>Manages: </li></ul><ul><ul><li>community centre </li></ul></ul><ul><ul><li>assembly rooms </li></ul></ul><ul><ul><li>business units </li></ul></ul><ul><li>Strong volunteer involvement </li></ul><ul><li>Small paid staff team </li></ul>

19.
Eaga: from social enterprise … to Plc … to …. Carillion <ul><li>Started by 5 staff to address fuel poverty </li></ul><ul><li>Initially a CLG, then CLS then Plc </li></ul><ul><li>Established employee benefit trust (EBT) and transferred share ownership </li></ul><ul><li>Established charitable trust to fund research into fuel poverty and wider energy issues </li></ul><ul><li>Floated 49% of business on Stock Exchange </li></ul><ul><li>4,000 partners (2007) </li></ul><ul><li>Partners council </li></ul><ul><li>Revenue £762m, 51m pre tax profit (2010) </li></ul><ul><li>Now Carillion Energy Services </li></ul>

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Lessons? <ul><li>The choice of legal structure matters </li></ul><ul><li>Understand the ‘differences’ </li></ul><ul><li>It takes time to develop services, governance, management, participation and the ‘culture’ of organisation </li></ul><ul><li>Service transfers can lead to different ways of ‘thinking’ about service delivery </li></ul><ul><li>Choose structure for right reasons </li></ul>

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New opportunities <ul><li>Changing relationships </li></ul><ul><li>New service delivery models </li></ul><ul><li>New financing and funding models </li></ul><ul><li>New training and support services </li></ul><ul><li>Organisational difference and what it offers to users and providers </li></ul>

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New publication <ul><li>What is a social enterprise? </li></ul><ul><li>Types of social enterprise </li></ul><ul><li>Legal structures part 1 </li></ul><ul><li>Legal structures part 2 </li></ul><ul><li>Financing </li></ul><ul><li>Charity trading </li></ul><ul><li>Tax and social enterprise </li></ul><ul><li>Governance </li></ul><ul><li>Tupe </li></ul><ul><li>Considering options </li></ul>

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Questions - discussion <ul><li>[email_address] </li></ul><ul><li>http://www.cipfa.org.uk/bigsociety </li></ul><ul><li>http://www.cipfa.org.uk/panels/charity </li></ul>