Radical change needed to support social enterprise start ups, says Red Tory report

The new coalition government needs to radicalise business support, slash bureaucracy and introduce a tax change to help social enterprises thrive, according to a new report from the Red Tory think tank ResPublica.

The Venture Societyfrom ResPublica’s civil society and social innovation unit, part of a project commissioned by UnLtd, was launched last night at the opening of the Shine Unconference.

It makes seven calls to government to help create the Conservatives’ Big Society and break down the ‘numerous barriers’ to the development of new social enterprises. These include government reforming its own structures to secure more support and investment for social entrepreneurs at the grassroots.

While it recognises improvements made during Labour’s 13 years, the report criticises existing support and reveals that just one per cent of the 238,000 social enterprises start-ups it says there are in the UK secure the funding or advice they need.

It calls for a ‘radical’ new support structure by developing a network of ‘community lablets’ that would act as incubators for new social enterprises, providing them with basic infrastructure, advice and funding to dramatically boost the number of start-up enterprises. These lablets, based on similar models in Denmark and the US, should be supported by established organisations like UnLtd, which would develop ‘social labs’ to support innovation in the sector, and be placed under the responsibility of the Cabinet Office.

‘The large social foundations would crucially provide financial support and guidance to these new enterprises, which is still the major reason for failure of social enterprises,’ a report spokesperson said.

The report also recommends that regulatory powers are transferred to the social labs, which would get the power to approve new, flexible structures for social start ups funded by community lablets.

Other calls include:

• the creation of a bureaucracy task force that would cut the burden of regulation on early stage social entrepreneurs;
• the establishment of pilot ‘virtual advisory boards’, which would work with existing providers to lever in more funding into the sector;
• a new fund and plan to support mutual, co-operative and foundation models, which could then make local decisions about venture priorities;
• a switch in funding from existing programmes to provide greater support towards start-up costs and local infrastructure;
• the development of a capitalised social investment bank, targeted tax breaks for new investment vehicles and a community reinvestment act.

Cliff Prior, CEO of UnLtd, said:‘There are tough times ahead for the UK and we need to make it easier for people to do good, with seed investment and proportionate regulation. Right now we are in the position where it is easier for a teenager to start a youth gang than a youth club – we must turn that round, and this report gives us radical new ideas to help us do so.’

Phillip Blond, founder of ResPublica, added: ‘One section of the report that stands out for me is the idea that consumers don’t want abstract symbols, they want concrete stories. And there are no stories better than local, community stories. This is a metaphor for the role of social enterprise and social entrepreneurs as we try to build a new economic model for the poorest and least advantaged members of our society.’