In the second part of my review of the year, I look at what the last six months has meant for the UK Social Economy.
And they’re off! things really gathered pace for the sector during July. So while I was busy watching Camel racing, BIS and the City of London were crunching numbers. They released an important report showing that the social investment market grew by almost a quarter in 2011/12. And if that wasn’t exciting enough, Chris White MP, architect of the Social Value Act, was appointed as the government’s Social Value Ambassador (whatever that means?). Oh yeah, and a baby was born who will one day be your superior. Congrats!
Hot in the city: if you’d managed to get all the way to August without hearing about Social Impact Bonds (SIBs), further congratulations! SIBs were in the press over the summer for all the wrong reasons though – Social Market Foundation questioned whether the benefits supposedly generated by SIBs will materialise in reality, whilst a report looking at Allia’s ‘Future for Children’ bond highlighted several reasons why it didn’t work as planned, including ‘too short a timescale’ and ‘marketing challenges’, amongst others. Nonetheless, SIBs would be a major conversation piece throughout the remainder of 2013, to the point where my dreams were constructed by multiple investors.
The promised land? Yet over the hump and rolling down hill towards the end of the year, things increasingly looked up for the sector. September saw a flurry of announcements that all promised so much:
- at their party conference, Labour really got things going by promising to introduce a 20-month freeze in energy prices. Spotting an opportunity, the Social Economy Alliance wrote to Ed Miliband, showcasing the work of cooperatives and social enterprises in the energy sector. In their letter the Alliance pushed for a ’21st Century debate’, arguing it “must not be about big state versus big business. But about big problems versus big opportunities”
- members of the G8’s Social Impact Investment Taskforce were announced, with the UK sending representation from the Cabinet Office and Sir Ronald Cohen
- Ministers said they were going to re-draft the lobbying bill in light of concerns from charities that it would limit their ability to campaign on social issues
- buoyed by the growing number of Community Interest Companies (CICs) opting for the Social Enterprise Mark (SEM), the CIC Regulator and SEM joined forces in order to exchange information and provide feedback on relevant issues relating to CICs.
Ah, the heady days of September!
Reality check: sometimes though, when you’re going too fast, the wheels can start to come off. So in less than a month the sector went from hoping its’ calls hadn’t fallen on deaf ears, to realising they most definitely had. Despite best efforts, proposed amendments to the Lobbying Bill were defeated after it passed its third reading.
The good news was also short-lived for SEM, as someone unilaterally decided that what the world needs now is another certification scheme for social enterprise. It remains to be seen whether or not it will work, but given that less than 450 social enterprises have used its main competitor Social Enterprise Mark, the outlook is pretty hazy.
Elsewhere, the Tories used their party conference to bash Labour for being anti-business, prompting the Social Economy Alliance (SEA) to respond with a letter about the need to get beyond the ‘pro-business/anti-business’ dichotomy. SEA also jumped on the news that the Financial Conduct Authority has planned tighter regulations for payday lenders, highlighting the potential of credit unions (among others) in this area.
Ah, how I long for those heady days of September!
The wheels fly off: in November there were two big stories, both tangentially related to substance misuse. Firstly, comedian-come-revolutionary Russell Brand got everyone excited about not voting. Then, just to prove substance misuse is no barrier to responsibility and influence, news emerged that former Chair of the Cooperative Bank, Rev Paul Flowers, was filmed buying coke (and not the fizzy variety). This scandal prompted the Chair of the Cooperative Group to resign, as well as speculation that the Co-op Group is too cosy to the Labour party. Labour owes the Co-op around £1.4m, whilst it was revealed its political wing, The Co-op Party, donated £50,000 to Ed Balls. This was all on top of news that the bank is to cut its branch network by 15%, bringing to close a bad, bad month for the cooperative brand.
With all this hubbub it is little wonder then that you may have missed the launch of the Social Investment Research Council and the launch of EngagedX, the world’s first financial index and data platform for social impact investing. Expect both to play key roles in the sector during 2014.
A fresh start? despite a bumpy year, December brought real change and hope for the Social Economy, most notably through the Chancellor’s Autumn statement. This promised:
- cuts in national insurance contributions for businesses employing young people
- plans to cap inflation increases in business rates
- plans to provide a tax relief on investment in SIBs, and;
- the final shape of the Social Investment Tax Relief (SITR), though it is subject to the EU’s limits on State Aid.
More details can be found here, though the SITR generally seems to be good news. Alongside these developments, the CIC regulator agreed to remove the dividend cap from the CIC limited by shares structure, so the future really is looking bright.
December also brought the sad news of Nelson Mandela’s passing, serving to remind us of what can be achieved when good people stand up and do something. An ambition we should all surely aim for in the year ahead.
2014 and beyond…so what do you think the next year holds? More growth in the social investment market? More problems at the Coop Bank? Let me know what you think below. In the meanwhile, have a great New Year!