Share

New government legislation contains definition of social enterprise

New government legislation contains definition of social enterprise
News

New government legislation contains definition of social enterprise

Finance | Vibeka Mair | 7 Jan 2013

New regulations recently laid before Parliament contain a legal definition of social enterprise.

The definition applies to the appointment of new Healthwatch bodies under the NHS Bodies and Local Authorities (Partnership Arrangements, Care Trusts, Public Health and Local Healthwatch) Regulations 2012.

The regulations, from the Department of Health, state that new Healthwatch organisations, which champion the rights of health service users, must be social enterprises.

It defines a social enterprise as a charity or community interest company; or an organisation which has provisions in its constitution which ensure that it distributes less than 50 per cent of its profit to shareholders, states that it is a body carrying out activities for the benefit of the community and has clauses that require it to pass on its assets to another social enterprise if it dissolves or winds up.

Lucy Findlay, managing director of the Social Enterprise Mark Company, has criticised the definition as too vague: “Broadly, the Government’s new legal definition of social enterprise fits with the criteria of the social enterprise mark and I feel some clarification is better than none. However, it has two significant weaknesses: no requirement for independence and vagueness on ‘social purpose’.

Any company or organisation could potentially set up a social enterprise under this definition and they could still remain in control of it (sometimes known as the golden share) albeit with limited profit distribution and a lock on residual assets (if the company closes).  This allows for ‘sham’ social enterprises – being used as a front for potential bidding for health contracts and will further blur the lines with regards to the privatisation of the NHS.  We have seen this in other externalisations such as leisure trusts where a local authority has overall control of the company.

"In addition, the definition does not provide much guidance to those looking for clarity and direction in setting up or converting to social enterprise models – which is a key strength of the work we are doing.  This vagueness is illustrated when trying to interpret how ‘a person might reasonably consider that it acts for the benefit of the community. 

Who will assess and verify this?” she asks.

However, Ceri Jones, head of policy and research at Social Enterprise UK, has said the new regulations should not be viewed as a definition of social enterprise as this would be likely to come from the Cabinet Office: “This is simply the Department for Health defining the structure of Healthwatch bodies,” she said.

Comments

[Cancel] | Reply to:

Close »

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

  • Robust but respectful debate
  • Strongly held opinions
  • Intelligent relevant discussion
  • The sharing of relevant experiences
  • New participants

We will not publish:

  • Rude, threatening, offensive, obscene or abusive language, or links to such material
  • Links to commercial organisations or spam postings. The comments board is not an advertising platform
  • The posting of contact details for yourself or others
  • Comments intended for malicious purpose or mindless abuse
  • Comments purporting to be from another person or organisation under false pretences
  • Gratuitous criticism, commentary or self-promotion
  • Any material which breaches copyright or privacy laws, or could be considered libellous
  • The use of the comments board for the pursuit or extension of personal disputes

Be aware:

  • Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media
  • Comments left by others may not be accurate, do not rely on them as fact
  • You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

  • Enjoy the opportunity to express your opinion and respect the right of others to express theirs
  • Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.

Plans to add extra step to digital gift aid ‘completely ridiculous’

3 May 2016

A plan to introduce a “pre-donation questionnaire” for supporters before they can make gift aided...

HMRC announces new gift aid guidance, and plans for extra step in online gift aid process

29 Apr 2016

HM Revenue & Customs has updated its guidance on digital gift aid, and said it will introduce a “pre-donation...

Government criticises ‘irresponsible and immoral practices’ of some large charities

28 Apr 2016

The government has attacked “irresponsible and immoral practices” at some large fundraising organisations...

Charities serving London increase by over 14 per cent during Boris Johnson’s time as mayor

3 May 2016

The number of charities serving London increased by 14.7 per cent during Boris Johnson’s time as mayor...

Who’s Moving: All the latest movers in the charity sector

3 May 2016

Virgin Money Foundation, Stonewall, Cancer Research UK and more announce their latest appointments.

Regulator opens investigation and restricts bank transactions at Islamic charity

29 Apr 2016

The Charity Commission has launched a statutory inquiry into Islamic charity, Peacetrail, and restricted...

Charity Tax Group launches new website

29 Apr 2016

The Charity Tax Group has launched a new website and online guide to tax for charities, intended to help...

NCVO publishes free digital skills toolkit for charities

21 Apr 2016

NCVO has launched a toolkit for the voluntary sector, which is designed to help organisations “plan,...

Google announces grantees of $20m disability fund

14 Apr 2016

Google has announced the 29 organisations which are to receive a share of the £14m ($20m) fund set up...

Join the discussion

 Twitter button

@CSFinance