A report released today by the Social Enterprise Coalition, the national body for social enterprise, says we have lost sight of the need for economic reform in the current Big Society debate about public and voluntary sector cuts, and citizenship.

The Conservative Party’s 2010 manifesto outlined the need for broader economic reform in addition to a change to civil society.

Time for Social Enterprise says Government needs to bring the two together and clarify the role business will play in the Big Society, which has so far been missing.

The report says the system in which philanthropy, corporate social responsibility and government grants fund the work of charities is a one-dimensional way of tackling the country’s social and environmental problems.

It says that social enterprise provides a better alternative because it contributes to GDP whilst simultaneously tackling social and environmental problems.

Time for Social Enterprise is based on a policy review, interviews with some of the UK’s leading people in business and finance who are supporting social enterprise, as well as social entrepreneurs.

Social enterprises are businesses, but are commonly mistaken for charities, and operate in almost every industry in the UK, from health and social care to renewable energy, from retail to recycling, from employment to sport, from housing to education.

There are 62,000 social enterprises in the UK, contributing over £20 billion to the economy and employing nearly a million people.

Polarised roles of charities and private businesses lead to ‘inefficient patterns of earning and giving’ by the public

According to the report, people working for businesses that create environmental or social problems and then making donations to charity is an ‘inefficient way of earning and giving’.

It states that the current system in which private sector businesses and charities have for years pursued drastically different goals has led to this pattern of how money moves through the economy.

The report says that if greater numbers of people were to work in social enterprise, they would automatically make a positive difference to society in their day-to-day lives through their jobs.

It also suggests that through purchasing of goods and services provided by social enterprises, consumers have the power to make a positive difference.

YouGov polling carried out for this report reveals that there is a public appetite for social enterprise: 52% of British adults say they want to make a positive difference to society or the environment through their work.

This figure rises to 65% of those aged 18 to 25, and 27% of people in this age group also say they would take a pay cut to do something more rewarding, compared with only 19% of those over the age of 55.

One in three people say the organisations they work for only care about generating profit for their owners or shareholders.

This backs more research [2] which found that 70% of people believe more business people should use their skills to tackle social problems, and two-thirds want more employee-owned businesses (63%), many of which are social enterprises.

Under the Government’s Rights to Provide and Right to Request schemes a number of groups of employees from within the health and social care sectors are choosing to ‘spin out’ to set up social enterprises to deliver public services, demonstrating further support for the social enterprise model.

Corporate recognition of social enterprise as a new market

Forward thinking businesses are already making way for social enterprise as a powerful new market.

Last year the Royal Bank of Scotland (RBS) set up a social enterprise frontline banking team, and the telecommunications giant O2 launched a bespoke mobile phone package for social enterprises, saying: “These days, building your business around making the world fairer, safer, happier or greener doesn't just boost morale, it can boost your profile and your profits too. This is the age of Social Enterprise, and O2 UK is welcoming it with open arms. We want to do our bit to make things better for companies that are doing their bit to make things better for everyone.”

Peter Holbrook, Chief Executive of the Social Enterprise Coalition, said: “Social enterprise is catching on around the globe. It needs to be better understood and better-used in the UK.

"It can help take the massive strain off our charitable sector and help our economy recover sustainably, rather than replacing like with like. There is a misconception that all 62,000 social enterprises in the UK sit alongside charities in the voluntary sector, but they don’t, they stride all sectors and industries. They are businesses.

“The current system we have is ill equipped to deal with the challenges our country is facing. The recession, social problems like crime and unemployment, environmental issues like carbon emissions and a lack of landfill space are all things that the social enterprise movement seeks to remedy.

"Social enterprise makes a great deal of common sense, but to reach its potential it will require much broader awareness and understanding.”

Report recommendations

To help realise the growth of social enterprise, the Social Enterprise Coalition calls for:

The setting up of a national social enterprise taskforce to integrate social and economic policy to ensure greatest value is secured from all public spending.

A standardisation of how social value is measured and with guidance of how businesses are expected to report it.

Education strategies to ensure that the UK workforce and consumers can choose social value when they spend, save, earn and give.

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