Social Enterprise UK and Social Enterprise Mark have both instructed Clarity & Co to stop using their branding and kitemarks.
Clarity, an organisation that has been described as the first social enterprise, employs people with visual impairments and other disabilities making toiletries and household cleaning products. But it has been accused of owing staff up to £200,000.
The brand was bought out of administration nearly a year ago by businessman Nicholas Marks as Clarity Products Limited after the original charity, Clarity – Employment for Blind People, collapsed.
Speaking in parliament earlier this month, Iain Duncan Smith, Conservative MP for Chingford and Woodford Green, said: “The fact is that there is a social enterprise called Clarity that employs, essentially, people with disabilities. They work hard and have done for many years. Sadly, about a year ago, Clarity was taken over by a Mr Marks, and since then staff have failed to receive national insurance contributions, with many failing to receive their wages or support while undertaking childcare.
“The total amount that these decent but very vulnerable people have failed to receive is now around £200,000. They cannot claim benefits because they are essentially employed. I pushed my right hon. friends in the Treasury on whether they can give those staff interim payments, but I received no answer.”
‘Has not met the definition of a social enterprise’
When Clarity was sold last year, the announcement said the company “will continue to operate as a social enterprise to meet the needs of Clarity’s customers”.
However Social Enterprise UK and Social Enterprise Mark have both said it has not met their standards.
In a statement Social Enterprise UK (SEUK) said: “We wish to make absolutely clear that Clarity is no longer a member of Social Enterprise UK and we do not believe that it has met the definition of a social enterprise since its purchase by Mr Nicholas Marks.
“This includes the period during which these allegations have been made. We have requested that Clarity removes our Buy Social trademarks and certification from its website and products as soon as possible.”
SEUK added: “We were deeply saddened that Clarity was not able to remain a social enterprise after it went into administration last year. We hope that the situation is resolved a quickly as possible for the staff and community.”
Social Enterprise Mark said: “Clarity & Co. previously held our Social Enterprise Mark accreditation, but their licence to hold the Mark was expired in April 2020 following the sale to Mr Marks, when it became apparent they no longer met our criteria and did not intend taking action to return to the required standard.
“Organisations are permitted a short period of grace to remove all mentions of the mark from their website and communications following such action. We have since consistently repeated our requests for our mark to be removed and have received assurance that this is now being actioned. We note that the Clarity & Co. website is currently unavailable, so are unable to confirm this action has been taken at this time.
“We are deeply troubled by the allegations surrounding Clarity & Co. and hope that the situation is resolved as quickly as possible for the staff involved. It is sad to lose one of the UK’s longest standing social enterprises, which, over the last 160 years, has provided valuable employment and training for vulnerable and disadvantaged workers.”
Need for legal safeguards?
SEUK and Social Enterprise Mark both said the case raises questions about how to ensure social enterprises stick to their values.
SEUK said: “This incident has highlighted the need to consider what legal safeguards can be put in place to ensure that social enterprises which fall into distress are not lost but remain on mission. Social Enterprise UK will continue to work with Sir Ian, regulators, government and other stakeholders to protect the integrity of the social enterprise sector.”
Meanwhile, Social Enterprise Mark said: “This matter has raised the important point of how social enterprises which fall upon hard times can be supported to remain true to social enterprise principles, in the event of a transfer of ownership.
“It is our policy to allow any mark holders who are identified as not meeting the standard a fair period of time to take action to address issues and return to the good practice the Social Enterprise Mark encapsulates, although failure to demonstrate what actions they have taken will result in their accreditation being revoked.”
Clarity – Employment for Blind People had also been a registered charity and trustees had initially hoped to sell the business to another charity, however that deal fell through.
An administrators’ report from February 2020 says that it had traded at a loss for 20 years, and that draft accounts for the year to March 2019 showed an operating loss of £1.5m.
The charity had been covering the losses from its investment fund but this was “substantially exhausted”. It also faced a pension deficit of £1.3m, with the pension scheme making up the bulk of the creditors.