This article first appeared on Pioneer's Post.
As decision time looms on where to allocate more than £700m of dormant assets, the MP for Stoke-on-Trent Central makes the case for social entrepreneurs – who "dare to think differently" and make a huge impact, especially in underserved areas of the UK.
In his first speech of 2023, Rishi Sunak talked about the importance of putting innovation “at the heart of everything we do”.
This is a sentiment I couldn’t agree with more. Cultivating curiosity, imagination and creativity to invent innovative solutions has the potential to transform the markets and communities that need them most. People often see a trade-off between social progress and economic efficiency. However, society profits when social enterprise profits. Recently, five social ventures tracked by UnLtd were found to have together generated £18.35m in social value, plus £1.45m in economic value, in one year. A cost-benefit ratio showed that for every £1 invested into these ventures, a minimum of £1.81 of benefits were produced. Social entrepreneurs are in a unique position to deliver unrivalled social impact, especially in the most underserved communities. However, for many of the country’s most innovative startups, relying on external finance might be their only way of survival until they begin to turn a profit. Like businesses, they need capital to grow so they can have greater impact and help more people in their local communities. These vital organisations often struggle to access finance from mainstream lenders.
The consultation on the English portion of future dormant assets has now ended, and we are awaiting an announcement on the decision of what they will be used for very soon. These assets could be worth over £700m in the next decade, and I would be delighted to see them driving long-term systemic change through investing in community enterprises. If dormant asset funding can enable social entrepreneurs to access the finance they need to start and to scale up, they can deliver unrivalled social impact.
Not only does one in five social enterprises serve a deprived community, but 2021 data from Social Enterprise UK also showed that these social enterprises were twice as large as social enterprises working in other parts of the country. On average, each social entrepreneur backed by UnLtd, for example, benefits over 1,200 people, creates three job opportunities as well as supporting seven others into jobs, and delivers training to a further 79. By releasing the entrepreneurial spirit currently held dormant in areas that need this productivity most, there is unparalleled potential and opportunity to level up.
Social entrepreneurs can make dormant assets go further by leveraging additional investment, and delivering sustainable, high impact solutions to today’s challenges. As the Community Enterprise Growth Plan lays out, dormant assets can be used by enterprises to attract match funding from private investors, multiplying the amount available to benefit society. Crucially, through social investment, the money invested is repaid and recycled, enabling funds to be used again and again to grow future support for trading charities and social enterprises. Estimates suggest that this could double the value of future dormant assets in the next decade. This is not about handing down top-down solutions to communities that have witnessed decades of failed interventions, but instead supporting and investing in them to deliver positive impact in a financially sustainable way.
The Community Enterprise Growth plan builds on a strong track record of using dormant assets over the last ten years to invest in social enterprises, community businesses and trading charities, and complements other proposed uses of dormant assets. For instance, before Christmas I held a Westminster Hall debate advocating for dormant assets to be used to create Community Wealth Funds. I am convinced that not only would the community wealth fund help to meet government goals, but we should also expect knock-on benefits for the economy. Replenishing stocks of social capital is vital for seeding economic activity, as well as for creating local employment, opportunities for training and skills development, and building and rejuvenating community assets.
Community wealth funds can also play an important role in supporting early-stage social entrepreneurs in marginalised constituencies by connecting them to wider support to maximise their growth. The proposals would provide extra initial startup support, among other things, in the most underserved parts of England.
By backing both these proposals, estimates suggest that social entrepreneurs could receive up to £1bn in financial support throughout the next decade. Indeed, while previous focus has been on establishing market infrastructure and growing the market overall, it would be great to see a move in social investment to being about ensuring that communities across the country are benefitting equally. Both Community Wealth Funds and the Community Enterprise Growth Plan would be able to ensure the flow of finance was targeted to places and communities that have not benefitted in the past.
As Member of Parliament for Stoke-on-Trent Central, I often have the opportunity to see the great work of businesses and entrepreneurs throughout my constituency. Recently a team from UnLtd joined me to visit local entrepreneurs as part of Small Business Saturday. We visited In2 Health and Wellbeing CIC, where it was great to hear about the work they are doing to improve the health and wellbeing of young people in Stoke-on-Trent. However, with more investment they would be able to secure more contracts, deliver more programmes and achieve an even greater social impact overall.
As chair of the All-Party Parliamentary Group (APPG) on social enterprise, I have heard time and again about the obstacles preventing businesses from scaling up. I am confident that if financial barriers can be overcome, a more diverse generation of social entrepreneurs could be unearthed.
Progress in our country is made from innovation. Thanks to entrepreneurs, people and businesses daring to think differently, commercial success can be combined with real social impact. Funding from the next round of dormant assets has the potential to help communities and businesses grasp the opportunities that lie ahead, and I would be delighted to hear this acknowledged in the coming weeks.
Jo Gideon is member of parliament for Stoke-on-Trent Central, chair of the APPG on Social Enterprise, and a former social entrepreneur.