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Social enterprises redefine bottom-line benefits for local government
Published: 2010-02-02 16:22:22
Social enterprises could be set to play a much larger role in regeneration and SocInvest 2010 will examine their impact - real and potential.
As recession and budgetary constraints force local authorities to become increasingly resourceful, the unique purpose of social enterprises opens up a number of attractive possibilities for cash-strapped authorities.
In many respects social enterprises operate like commercial, market-driven companies, the difference being their primary purpose: to put back any surplus profits into the community. This difference makes them particularly attractive partners for local authorities.
Dave Neilson is chief executive of a partnership of housing associations called Fusion21. "The problem with many PFI initiatives is that partners are only bound to use 'best endeavours' where social outcomes are concerned," he told SocInvest. "There is no obligation to do so."
By contrast, that is exactly what a social enterprise is set up to do.
Originally created by seven social landlords and two local authorities in the Merseyside area to streamline the procurement process for housing projects, Fusion21 now operates on a wider national scale. "The initial business was set up to handle £225 million worth of procurement and achieve a 5-10% saving," says Neilson.
The goal was to help local government and housing associations manage their collective spending throughout the supply chain. Additionally the Fusion21 procurement model creates, training and employment opportunities for local people from the savings and volume efficiencies.
These opportunities are made available through the contractual conditions that the Fusion21 supply chain adheres to. One percent of the total contract value is contributed by the Fusion21 supply chain partners. This contributes to promoting and delivering the construction training and job creation.
Over the past three years, Fusion21 has accumulated a number of impressive wins including:
• Delivering about £15 million of cashable efficiency savings, as well as many non-cashable benefits
• Creating 602 permanent jobs in construction
• Providing vocational training to over 700 Merseyside residents, many of whom have gained NVQs in key construction skills
• Generating an estimated financial benefit to Merseyside boroughs in excess of £18.5 million, through regular paid work and reductions in benefit claims.
Fusion21 has picked up a number of awards including the Women in Construction 'Lifetime Achievement Award'. It was also was one of the first to be awarded a Housing Corporation Gold Award for Innovation in Procurement and has been identified as best practice by the Audit Commission.
One of the advantages of social enterprises, said Neilson, is that they make life easier for their partners. "There is government money for employment programmes," he noted, "but it is difficult to access and have very strict criteria. We help to fund work programmes through costs savings on procurement."
Because of its central supply chain management role, Fusion21 can also help to improve conditions for development and construction companies.
"Through our work smoothing programme we can achieve better regulated workflows, on time and on budget," said Neilson. "There's a payback for developer and construction companies who meet or better delivery targets and client/customer satisfaction targets. This drives continuous improvement programmes and gets people off site quicker. It also means we can provide continuity of projects which encourages construction companies to take on fulltime employees."
He also saw social enterprises playing a wider role in regeneration. They work best, according to Neilson, when set up regionally to serve a number of authorities.
"There is enormous scope for social enterprises for carbon reduction, climate change and green economy programmes. The greatest challenge is retrofitting existing housing stock and Fusion21 are working closely with its partners to develop a range of solutions; particularly linked to training and employment."
Dave Neilson speaks at SocInvest 2010, 16 June, London. See the website for more details.