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John McMullan

John McMullan

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Social Enterprise places social impact rather than shareholder returns as the primary market driver within its social business model – ‘profit with purpose’. Social Enterprise is often misrepresented as the new economic ‘kid on the block’, which I suspect, stems primarily from a traditional economic perspective of our economy based on a ‘duopoly’ built around the relationship and interaction between the public and private sectors.

However, Northern Ireland has a long history of social business provision with a range of historic and modern exemplars which include: the co–operative movement; the credit union movement, Belfast City Council Leisure Centres and most of Northern Ireland’s kerb–sort domestic recycling services. 

These social businesses contribute significantly to community wealth building. However, to continue to grow and flourish they will need government policy to evolve and recognise a more inclusive, plural, economic model creating a modern economy which treats social enterprise as equal within a new tripartite economic policy construct – alongside the public and private sectors. To establish and enable this modern economic paradigm we will need our local economic policy to align with the rest of the UK devolved administrations and introduce a Social Value Act for Northern Ireland.

The most recent research available into the growth and impact of the social economy was commissioned by Social Enterprise NI and published in its 2019 report, ‘Rebalancing the NI Economy’. The report builds on the previous survey carried out in 2013 and highlights significant growth in the 5 years to 2018. The economists Baker Tilly Mooney Moore, who carried out the economic impact assessment, estimate the combined economic impact of the social economy to be worth £625m. The Report notes that the social enterprise employment base has grown from 12,200 in 2013 to 24,860 with an equivalent growth in turnover for the same period having increased from £592.7 to £980m. As a demonstration of growth potential, the report records that 44% of the organisations surveyed commenced trading within the previous five years with 25% of those within the last two years. 

Two important results contained within the report highlight that 43% of social enterprises are led by women (consistent with UK as a whole) demonstrating a diminishing effect of the ‘glass–ceiling’ and that 53% of those social enterprise surveyed employ at least half of their workforce from their local area, with 33% based in the highest areas of economic and social deprivation, thus demonstrating the potential of the model to address disadvantage, deprivation, economic inactivity and support/encourage entrepreneurship and innovation.

This blog has noted above that Social Enterprise is neither new nor novel; it has been overlooked by traditional economic thinking; it is vibrant, capable of significant growth and uniquely demonstrates the ‘Heineken Effect’, in reaching parts of society that other policy interventions can’t reach. In framing the impact of social enterprise it should be noted that it is an investment and commercial business model, which delivers community wealth building better than other economic models. When established it delivers greater community cohesion, greater resilience and an economic platform for reinvesting within local communities.

There is clearly much merit in this social business model but to exploit it we need significant and fundamental economic policy changes to be brought about and government has a leadership role to play. We need a shift in the traditional economic paradigm to recognise the actual plurality of the modern N Ireland economy and a policy evolution to support such. Our government orientates economic policy to enable and support private sector growth. We need that to be expanded to include the growth of the social economy. Government has a strategy and plan, 10X (currently under review) for private sector growth; we need a similar or inclusive 5–10 year strategy and plan for growing the social economy. The other UK administrations and the Republic of Ireland have their own social enterprise growth strategies but our policy development has been reluctant to keep pace. 

Much work was done with support from the previous Finance Minister Conor Murphy MLA to consider the development of a Social Value Act N Ireland, which would have aligned with the other UK administrations’ legislative provisions. Our unique political challenges meant a collapse of our Assembly but to build a platform for the direction of travel two Procurement Policy Notes were produced by the last Procurement Board under the Minister’s direction. They required social value to be scored at a minimum of 10% in public procurement competitions with a review to consider an increase to a 20% minimum post implementation. 

This was a helpful development but as a policy note it is not secure going forward. Government spends circa £3bn per annum of securing goods and services, requiring that spend to maximise social impact through the awarding of contracts is a rational evolution of procurement policy and practice. This would ensure a more level competitive ‘playing field’ for the social economy. To assure its development and implementation going forward a legislative Social Value Act NI is essential.

John McMullan, Chair of Social Enterprise NI 

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