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Hurd hints at legal definition for social enterprise

Hazel Blears MP
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Hurd hints at legal definition for social enterprise2

Governance | Vibeka Mair | 27 Oct 2011

Former Communities Secretary Hazel Blears MP has called for a legal definition for social enterprises, while minister for civil society Nick Hurd has conceded that such a definition may be required.

Blears made the call last week during a parliamentary debate on the Public Services (Social Value) Bill, in which minister for civil society Nick Hurd successfully passed amendments on behalf of the government to remove the term ‘social enterprise’ from the Bill’s title, and remove social enterprise strategies from the Bill.

In the two-hour debate, Labour MP Blears, who objected to removing 'social enterprise' from the Bill's title, spoke of her concerns around the definition of social enterprise:

“Some ministers have told me that it [social enterprise] is anything not in the public sector, and I am increasingly worried that the integrity of the social enterprise sector is being worn down because organisations that are clearly not social enterprises are parading as them.

"Will the minister tell us where we can get a legally-agreed definition of social enterprise?”

In response, Hurd admitted that such a definition could be needed in the future:

“In terms of where legal definitions may emerge and the need for them, one has not perhaps been required up to now, although that may change.”

Blears: social enterprise brand could get tainted

Blears told civilsociety.co.uk that she was encouraged by Nick Hurd’s comments, and promised to hold him to it:

“I put some questions to Hurd about a definition for social enterprise, as the sector is growing. I think it is now quite urgent because otherwise we are going to get in a terrible mess where the brand of social enterprise becomes tainted because we haven’t got a proper definition.”

She added that she was especially concerned about the NHS 'right to provide' agenda, whereby public bodies spin out from the NHS and become mutuals and social enterprises:

“[Health Secretary] Andrew Lansley says he wants the NHS to be the biggest social enterprise in the world. This is big money, and it’s public money. I therefore think if taxpayers’ money has been used to provide the assets then there has to be an asset lock. Because otherwise what you could have is an undercapitalised social enterprise that folds three years down the line, and Capita takes it over.

“Therefore you’ve transferred public assets into the private sector with no compensation to the public purse – I think that’s wrong.”

Blears: 'Hurd is a lone voice'

Blears also expressed sympathy for Hurd who she said “genuinely believes in the agenda” to enable more social enterprises to deliver public services, but was a “bit of a lone voice” in the government.

“What’s happened to the Chris White Bill is that it’s almost been gutted,” she said. “It’s had the social enterprise bit taken out, it’s now limited to public sector contracts, it’s limited to the pre-procurement stage, it’s only for public services not goods  - it’s really been narrowed down.

“I think there is tension inside government between people like Nick Hurd who genuinely believe in the agenda, and then people who are basically private-sector driven. They see the social enterprise sector impingeing on what they believe really should be the job of private industry and therefore want to limit its influence.”

She admitted that the same problem also happened in the Labour party, where people feared the social-enterprise sector was treading on public-sector territory. “But this is much less so these days and I’m working very hard to make it even less,” she said.

Social Enterprise UK address crowds at Occupy

Elsewhere, Social Enterprise UK’s chief executive Peter Holbrook adressed the camp in Finsbury Square yesterday.

Holbrook met protestors and thanked them on behalf of establishment groups who are working to reform capitalism, saying that changing the way the world does business needs commitment from all parts of society.

 

 

 

Edward Finch
partner
Buzzacott LLP
28 Oct 2011

There is no agreed current definition and it remains debatable whether "social enterprise" should be used as a noun. A legal definition however would be incredibly different to arrive at as it is far from simply being like "a charity" or like "a private company."

Within the scope of the commonly used definitions there are a number of variables such as who pays for the goods and services (the recipient or a public authority) whether there is full payment for them or some subsidy and whether social goods are delivered as part and parcel of the business enterprise or through later application of the surpluses/ profits generated.

It may be more productive possibly to - as hinted at above by Ms Blears - define the entities that are permitted to take on public services in terms of restrictions on profit/ asset distribution, or otherwise capital bonds and guarantees similar to the travel industry.

If a public service deliverer (including care homes etc funded by local authorities) were required to be either asset locked or provide bonds/ guarantees then this would better address the protection of public assets than quibbling over the definition of social enterprise.

Ben Wittenberg
DSC
27 Oct 2011

There's no way the existing definition is going get any narrower while government *loves* social enterprise.

It serves their interests best for there to be as many of them as possible, irrespective of where any of them sit on the scale between "actually a charity" and "actually a private company".

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