Senior Labour figures make big commitment to social enterprise

As the Brexit drama continued to unfold in Westminster this week, senior opposition MPs were just a few blocks away, promising that – should Labour get into government – social enterprise would be “right at the heart of Labour’s economic policy.”

“It’s great that the sector is doing so well. But we want it to do a lot better,” said Rebecca Long Bailey, Shadow Secretary of State for Business, Energy and Industrial Strategy (BEIS). 

Long Bailey was speaking at an event hosted by Social Enterprise UK (SEUK) and Labour Business on Wednesday – the morning after her party had called a no-confidence vote in the government, following parliament’s defeat of Theresa May’s Brexit proposal.

In a speech warmly received by an audience of social enterprises, councillors and NGOs, Long Bailey reiterated policies from Labour’s manifesto, including a plan to double the size of the UK’s cooperative sector. 

Tipped by some as a candidate for party leadership, Long Bailey also said: “We think that social enterprises are integral to our industrial strategy.” In particular, she highlighted the role of cooperatives and social enterprises in delivering renewable energy. 

‘We think that social enterprises are integral to our industrial strategy’ – Rebecca Long Bailey

Also speaking at the event, Shadow Treasury Minister Anneliese Dodds said Labour wants to see “many more people” employed by the sector. Around 2 million people in the UK currently work for social enterprises, cooperatives and other social businesses, according to SEUK. 

Labour is currently discussing possible legislative changes to support and finance the growth of the sector. Shadow Minister for Small Business Bill Esterson said Labour would explore how the proposed National Investment Bank could help social enterprises and co-operatives grow. Government bodies need to be better equipped to advise and support on setting up a social enterprise, which needs to be part of “the cultural DNA” at government level, said Long Bailey.

Labour is also reviewing taxation, including Social Investment Tax Relief (SITR), which channelled just £1.8 million to 25 social enterprises in 2016/17, according to official figures. “This was meant to be a mechanism to radically improve the funding landscape for social enterprise. It just hasn’t happened,” Dodds said. 

There also needs to be a “very, very different approach” to procurement, including an overhaul of the Social Value Act, she said, calling on social enterprises to share ideas on how best to do this. 

Picking up on growing calls to ensure corporates look beyond shareholder profit to also consider their social purpose, Esterson said this was not Labour policy and would be “a massive change” in company law. But, he said, he was “increasingly attracted” to the idea: “I hope it’s something we can work towards.”

SEUK’s director of external affairs Andrew O’Brien welcomed the speeches as a “real step up” and a “major statement” in terms of commitment from Labour. Its ambitions could also be a “wake-up call” to the Conservatives, he said, whose focus has largely been on promoting social investment and less on reforming business.

Labour's ambitions could also be a ‘wake-up call’ to the Conservatives

The social enterprise portfolio has been housed by the Department of Culture, Media and Sport since 2016. Long Bailey said it was “terrible” to keep it within this “silo”. She said she was unable to commit to its move should Labour come to power, but that discussions were needed about where it should be placed. Dodds added: “Wherever it ends up, it will be a cross-cutting issue.”

There may be more immediate concerns for social enterprises though, who could face a possible “perfect storm” if current Brexit proposals go through, said Dodds – facing not only uncertainty but also “enormous problems” in recruiting EU workers with the proposed immigration salary threshold of £30,000.

Small business confidence has fallen to its lowest point since just after the financial crash, according to the Federation of Small Businesses, which warned of the damage of political uncertainty. Four in ten small businesses expect performance to worsen over this quarter, and two thirds are not planning to increase capital investment.