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Dai Powell's blog

Dai Powell is HCT Group's Chief executive. His blog explores ideas on social enterprise, transport and related issues. Always forthright, Dai’s views are his own and do not necessarily reflect the position of HCT Group.

 

How the transport sector can get the most out of social enterprises

Posted: 02 Aug 2011

The below is an interesting post by my colleague, Frank Villeneuve-Smith, on how local authorities could be getting more by working with transport social enterpises.  It first appeared on the Transport Xtra website:

Getting the most out of social enterpises

At first glance, are looking up for social enterprises. You can barely move these days without coming across praise for the sector in public policy. The current high profile of social enterprise has been helpful for us here at HCT Group in providing opportunities to talk about what we do with Local Authorities and why we are different to a regular contractor or operator. So far, so positive. However, there are issues that dampen our optimism just a touch.

Central government has described social enterprises as a key part of the radical shake up of public services and a key element of the ‘Big Society’. On one level, this is quite true. Social enterprises do have the capability to fundamentally change the way services are thought of and delivered. On another level, the view of central government can also embody an abject fantasy that services can be delivered by volunteers powered by tea and biscuits if the state walks away. This almost certainly won’t happen – even for really good biscuits.

At a Local Authority level, decision-makers are wondering – quite sensibly, given these straightened times – whether social enterprises might be able to deliver services from a lower cost base. Again, on one level this is quite true – social enterprises are often more efficient. On another level, to think of it only in these terms is a missed opportunity of the first order, undervaluing what social enterprises can do to help Local Authorities access the outcomes they seek in novel ways.

The presentation of social enterprises as a convenient, if vague, panacea has become commonplace and it probably doesn’t help Local Authorities to understand where social enterprises could fit in and how to get the most out of them. So why are the policy folk so excited? The reason comes from the very idea of a social enterprise.

Social enterprises are businesses driven by a social or environmental purpose. They are businesses, rather than traditional voluntary sector organisations, which means that they will want paying for the services they provide to you. So much for the tea and biscuits. But as they trade for a social or environmental purpose, they will normally do two things that add real value to a Local Authority. First, they reinvest their profits into activities that meet their social purpose (for example, we reinvest profits into delivering CT services). Frequently, they will also try to meet that purpose in the way that they work – for example, by providing training and employment opportunities for hard to reach groups – whilst they aim to make a profit, they are not traditionally ‘profit-maximising’.

The most important reasons for excitement are how services are thought of and developed. A focus on social purpose makes social enterprises naturally obsessed with outcomes – service design with the greatest possible social impact for the money built in. Also, most social enterprises seek very high levels of direct accountability with service users and are consequently often expert at user-led service design. Taken together, this is a recipe for the kind of innovation that re-imagines services from the ground up, allowing them to do more for less.

Local Authorities can do more to unleash the power of social enterprises, improving services and saving money. The trick comes down to procurement. Just this month, we bid for a series of small contracts in a reverse auction. Competitive on price, we won some and we lost some – but the Local Authority missed out. Nowhere during the process did we have the opportunity to point that the service would be delivered by previously long-term unemployed people, saving the Local Authority money in-year in benefits - with a net present value greater that the entire contract price. More dispiriting still, nowhere during the process was there an opportunity to unlock the insight of the community to rethink the whole thing. Procurement has to change to become less prescriptive and give bidders much more opportunity to make suggestions on new and better ways of doing things.

At a time when Local Authorities are searching for solutions in a very difficult set of circumstances, social enterprises can help. We are optimistic for the future because so many Local Authorities are skilled in meeting challenges through partnership and together, we can seek new ways to meet the needs of the communities we serve.

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