15 mins with Peter Holbrook, CEO of Social Enterprise UK

As the chief executive Social Enterprise UK, Peter Holbrook is passionate about creating social value. He talks to New Start about how social and community enterprises can rise to the challenge in economically uncertain times.

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Is now a good time to launch a social enterprise?
As long as we have capitalism and markets, then social enterprise has the potential to do very well. The public sector markets are tough for everybody operating in them right now. I think those markets are beginning to challenge a lot of social enterprises, who often reach a crossroads where they have to make a decision on their commitment to quality, or whether it’s better they deliver a service rather than an equivalent profit-making enterprise.

The community of spin-outs who left the health and community care services to become social enterprises are doing some incredible work. They are achieving better outcomes in terms of quality. They are financially viable, but those markets are becoming harsher and harsher. I have no doubt we will see some victims of those market conditions over the next few years.

What about the other markets in which social enterprises operate?
The consumer markets are standing up well. We have seen an increasing number of social enterprises operating in the fast-moving consumer goods sector. They seem to be doing pretty well. Consumers like a backstory and understand the power of the pound if they spend it wisely.

‘For every Jo Miller, there are many other local

authorities who are unreconstructed and stuck in their ways’

Many councils have transferred services to social enterprises and community groups. Does that help make the case for more community involvement in delivering public services?
It’s an inherently a more efficient model. When money is awash, it’s easier for the local authority to pay someone to do it. When that money does not exist, then they have to divest power and control to communities, who can take things on. We’ve seen some great social enterprises emerge as a consequence. But if the economic situation rapidly changed and local authorities felt flush again, then I’m sure they would try and retain power and control, spending more money in maintaining the status quo, rather than devolving power to communities to take on some of the responsibilities they are currently trying to rid themselves of.

Can you see local authorities trusting communities to run more services, like housing and regeneration?
Most local authorities are reluctant participants that don’t have too many options available to them. I think austerity and economic uncertainty will put even greater pressure on local authorities and more of them will do want to do this. Some have genuinely seen the positive aspects of what can happen under community ownership. There are some radical chief executives, like Jo Miller at Doncaster who is very much a champion of enabling others. But for every Jo Miller, there are many other local authorities who are unreconstructed and stuck in their ways.

It has been more than four years since the social value act came into force. How has it made a difference?
I think the social value act is a journey, not a destination. It’s beginning to push people into the realm of considering what social value is and how they can incorporate it into commissioning and tendering. We’ve already seen some good practice and a political consensus emerge about why we have to account for value in different ways. That has been driven as much by austerity as it is by sustainable development goals. We have to start evolving the way we think about value and looking at wider outcomes, other than quality and cost. I think it’s a great piece of legislation, which acts as a banner under which we can all stand and congregate, but it has to evolve with the times.

Can you see a shift towards more a localised and more socially responsible economy?
I have no doubt the world and the market is taking us in that direction. I would like to think what creates a lot more space for social enterprise, but what it will also do is drive business behaviour. I think what you will find is much a greater emphasis on transparency and reputation. Companies will operate in a much more socially responsible way, so I don’t think social enterprises will have an easy ride in the future.  I think the space they once occupied will become increasingly crowded by for-profit businesses who also are trying to capture social outcomes.

How will social enterprises rise to meet that challenge?
Traditional businesses becoming more social responsible can meet a lot of the challenges that our world faces. But the elephant in the room, which no one talks about is the massive growth in wealth inequality. The thing, which distinguishes social enterprises and co-operatives from mainstream businesses are their inherent ability to create genuinely shared financial value. As inequality becomes a more and more pressing challenge, you will find co-operatives develop an even greater USP as they are the ones who can pre-distribute wealth and power. The existing model of private sector business is unlikely to be able to create that shared sense of prosperity.