'Five weeks before cash could run out for half UK social enterprises' – warning to Chancellor

Leaders from across the UK social business movement today call on the Chancellor to spend £45m per year to safeguard the £60bn social enterprise sector – warning that half the country’s social enterprises could run out of cash by June.

In a letter to Chancellor Rishi Sunak, the nine membership network bosses warn that a million jobs could be lost as social enterprises continue to fall through the cracks of current Covid-19 support packages.

“Time is of the essence,” the letter claims. “Social enterprises contribute £60bn to the UK economy and employ 5% of the UK workforce. Yet these businesses keep reporting to us that they are still unable to access grants and loans which are critical to keeping their businesses alive.

“Once these businesses disappear it will take years to rebuild. Their loss will drag our economy down and unnecessarily elongate our recovery.”

Once these businesses disappear it will take years to rebuild. Their loss will drag our economy down and unnecessarily elongate our recovery.

The leaders – from the School for Social Entrepreneurs, Social Value UK, Community Leisure UK, Co-operatives UK, Plunkett Foundation, Social Enterprise Mark, UnLtd, Social Enterprise UK and Locality – propose a ‘Social Enterprise Covid-19 Sustainable Recovery Plan’ to protect the country’s 100,000 social enterprises.

The package, they claim, “would only cost an additional £45m in debt interest relief each year” to preserve the £60bn contribution – equivalent to 3% of GDP – the sector makes annual to the UK economy.

Five recommendations are made in the plan:

Recommendation 1: Small social enterprises with a turnover under £632,000 or under 1 year old should be given access to the £10k Small Business Rate Relief Grant.

Recommendation 2: Social enterprises working in the most deprived communities or with at least 25% staff that are vulnerable workers should have access to the £25k grant for hospitality, leisure and retail sector.

Recommendation 3: Government should provide a capital injection of £200-300m to the social investment community to deploy into larger social enterprises.

Recommendation 4: Social enterprises delivering public services on behalf of state by contract or grant should receive access to the same emergency funding as statutory bodies.

Recommendation 5: Provide funding for business support to enable social enterprises to adapt and transition their businesses at an estimated cost of £20m over 18 months.

Altogether, the organisations estimate that the recommendations would cost between £1.57bn and £1.67bn to deliver (not including access to emergency funding for delivering public services in recommendation 4), which would be spread over a number of years.

The letter also points out that social enterprises are more likely to work in the poorest areas than traditional SMEs or charities – with 1 in 5 based in the UK’s most deprived communities.

“Social enterprises also employ those furthest from the labour market,” it says. “They employ tens of thousands of vulnerable and disadvantaged people such as those with disabilities, homeless people and veterans. Many of these workers will struggle to find employment if the social enterprises they work for close.

“Social enterprises are also more likely to be led by women and BAME people, the loss of their businesses will compound the inequalities in British business,” the letter adds.

Red tape and penny pinching is at risk of killing off thousands of social enterprises that we will need to deliver our recovery.

In a separate statement, Peter Holbrook, CEO of Social Enterprise UK said: “We all want to see Britain bounce back quickly from Covid-19 but red tape and penny pinching is at risk of killing off thousands of social enterprises that we will need to deliver our recovery... Unless we get our fair share of support, we risk going under at exactly the time when we are most needed.

“All we are asking for is our fair share of access to grants, loans and support, so that social enterprises can get through this crisis and help rebuild our communities. The Prime Minister, the Chancellor and the Government must show vision and leadership at this moment of national crisis.”

Mark Norbury, CEO of UnLtd, said: “Across the UK social entrepreneurs are adapting, mobilising and sustaining communities. We call on the Chancellor to sustain them with the financial support they urgently need.”

Affordable credit providers call for 'emergency hardship fund'

The call from social enterprise leaders comes hot on the heels of another letter sent to the Chancellor last week offering support on behalf of providers of affordable credit.

Despite the government’s emergency measures, “many people are facing stark drops in income whilst they navigate the helpful yet complex support packages, or are slipping through the cracks entirely”, said the letter co-signed by the leaders of Responsible Finance, Turn2Us, Carnegie UK Trust, Centre for Responsible Credit, Finance Innovation Lab, Yunus Centre for Social Business & Health and Community Finance Solutions.

They recommend “a targeted emergency fund for Local Authorities, with national delivery supported by affordable credit providers” providing products such as an emergency hardship fund to help financially vulnerable people affected by the pandemic.