news

Complex calculations reveal 62,000 UK social enterprises

28 July 2009

'We do believe that the number of social enterprises is increasing and therefore this new estimate is consistent with feedback from our partners that the sector is growing, which is great news'

 

Cabinet Office spokeswoman

Government researchers seem to have stumbled on another 7,000 social enterprises, pushing the figure to 62,000 in the UK.

However, the estimation, up from 55,000 cited in earlier government literature, is not an actual increase, but a new calculation of the number of social enterprises based on the same Annual Small Business Survey (ASBS) figures from 2005 to 2007.

The new figure has started to crop up in promotional material from both the Cabinet Office and the Social Enterprise Coalition.

A spokeswoman for the Cabinet Office said the increase was down to a new and 'complicated' way of working out the estimation.

She said: 'We have strengthened the methodology following advice from the Office of National Statistics. Moving to a rolling three-year average of ASBS data will provide a better estimate of the number of social enterprises.

'Using three years' data allows us to calculate a more up to date, more robust figure based on a rolling average across 2005 to 2007.'

She added that the new figure better represents the number of social enterprises in the UK, which the Cabinet Office believes is increasing.

'The new figure is higher than the old, which is consistent with the feedback we are receiving from partners,' she said.

'Because the methodology has changed we cannot compare this figure with previous estimates, however, we do believe that the number of social enterprises is increasing and therefore this new estimate is consistent with feedback from our partners that the sector is growing, which is great news.'

The spokeswoman could not say when new figures would be released, but said ASBS tends to revise figures every two years.

She added that the government's third sector research centre was 'carrying out research in the best method for counting social enterprises and we are waiting to see the results of this research'.

Comments

I remain unconvinced

Submitted by Geof Cox on 5 August 2009 - 11:32am.

I remain unconvinced of the value of the estimate even as a measure of growth: what if future growth comes mainly in areas of social enterprise that are excluded?
It is of course true that the term 'social enterprise' is widely used as a noun - and indeed that like the term 'business' it can easily be both verb and noun. It would be surprising if this wasn't the case in the UK where the government has tried to promote a particular (albeit self-contradictory) organisational-structure-based definition of social enterprise, where support structures such as Business Link demand structure-based support criteria, and indeed (forgive my cynicism here George) it is in the interests of sector bodies like the Social Enterprise Coalition to define a 'membership' distinct from other umbrella bodies.
But the point here goes deeper than this: it's about whether we're building a distinct sector or changing the way ALL business should be done. One of my current clients - a very successful social enterprise in my book - working internationally - decided to set up as an ordinary share company precisely because they wanted to demonstrate that ALL busineses can and should operate first for social and only secondly for financial gain.
In the end it's what you DO that's important, not what you ARE, and one of our greatest strengths lies in the fact that charities on the one hand and ordinary share companies on the other - indeed ANYBODY - can DO social enterprise.
You may be interested in the more detailed debates on this and related issues at
http://www.geofcox.info/index.php?q=blog
GEOF

www.geofcox.info

YES - 62,000 is an underestimate

Submitted by georgeleahy on 30 July 2009 - 10:50am.

Geof's critique of the figures helpfully shows that the government's estimate of the number of social enterprises is going to be lower than the actual number. And he missed other important factors: the survey only covers Companies Limited by Guarantee and Industrial and Provident Societies not including other legal forms that can be used to be a social enterprise. It also took out all companies that had no employees.

But the point is that it is a robust statistical estimate and it is changes in the size of the sector based on this measurement that will allow us to know if the sector is growing or not.

The new figure is welcome. There has been much scepticism in the movement that the figure was a high as 55,000. This more robust method of calculating the figure - based on fairly stringent criteria - shows that the 55,000 was always in the right ball park.

I challenge Geof that you cannot count social enterprise - many people and businesses do use the noun - they are social enterpises.

George Leahy
Social Enterprise Coalition

The number of 'social enterprises' just doesn't add up

Submitted by Geof Cox on 29 July 2009 - 3:04pm.

The actual basis of the figure of 55,000-62,000 is rarely scrutinised. The Small Business Service Annual Survey of Small Businesses 2005 in fact counted only 'social enterprises' that confirmed ALL of the following criteria:
* they think of themselves as a social enterprise (Q45b)
* they never pay more than 50% of profits to owners/shareholders (Q45)
* they generate more than 75% of income from traded goods/services (or receive less than 20% of income from grants and donations) (Q43)
* they think they are a very good fit with the Government Definition of a Social Enterprise.

These criteria in my view would exclude much – perhaps even most - social enterprise. Here are just some examples:
* they would exclude many organisations which Social Firms UK would classify as Social Firms, since these need only earn 50% of turnover from traded goods/services
* they would exclude many – perhaps most - Co-operatives – which are member-benefit organisations and often adhere strongly to the principle of distributing profits to members (who are indeed owners or shareholders)
* they would certainly exclude most Development Trusts – which aspire to generate their income from trading but very few of which (I believe) have actually achieved over 75% trading income
* they would exclude the often very substantial and successful trading divisions or subsidiaries of charities or other public or voluntary sector bodies (which typically do not generate 75% of the income of the whole charity – or if a subsidiary in fact gift most of their profits profits to their owners).

My own view is that counting 'social enterprises' will never work (because social enterprise is a verb not a noun – its something you do, not something you are).

Another recent news story - that the Social Enterprise Mark is 'falling flat' – is also interesting in this context. After 2 or more year's work, £470,000 from the Lottery, plus additional funding from the Co-operative Group and Triodos Bank - there are now 40 Social Enterprise Mark holders in the UK (and another 23 'in the pipeline'). So that's about half of one percent of the government's (low) estimate of social enterprises in the UK.

I really do not want to join the critics of the Social Enterprise Mark initiative because in fact their work on defining 'a social enterprise' is the best I have seen – a far deeper recognition of the complexity than the government's for example – but I do think it's wrong-headed - and I must admit I do wonder if they couldn't have actually set up 40 or so 'social enterprises' with that amount of money...

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