Social business contribution to Welsh economy jumps one third since 2016

Research published today reveals that the social business sector in Wales is worth an estimated £3.18bn.

This represents a 34% increase on findings in 2016, although the rise is partly due to researchers factoring in a larger dataset this time.

Mapping the Social Business Sector in Wales – published by Social Business Wales – identified more than 2,000 organisations in the sector, employing some 55,000 people and providing volunteering opportunities to around 58,000. Wales has a total population of around 3.1 million.

This year’s report is based on a survey among 699 social businesses and aims to provide an outline of the sector, including its size, composition and contribution to the Welsh economy.

It identifies “an increasing maturity” in the sector, with 28% of social businesses established for more than 20 years – up from 26% in 2016, and 23% in 2014.

28% of social businesses have been established for more than 20 years

More than three-quarters pay a living wage to all their staff, compared with 48% of Welsh SMEs.

Just over half generate more than three-quarters of their income through trading. This is up from 41% in 2014, but still lower than the UK-wide figure: some 74% of UK social enterprises earn more than three-quarters of income from trading, according to Social Enterprise UK research in 2017.

Funding and staff worries

The research also reveals the main challenges identified by business owners.

As in 2016, obtaining finance topped the list, with lack of grant funding available cited as a major factor in this: trading with the general public is now the primary source of income, compared to public sector grants in 2014. Businesses also said they lack capacity to apply for finance and are unaware of where to access it. Most of those who were concerned about Brexit based those worries on a potential loss of funding.

Lack of resource was the second most-cited barrier, and has become a more pressing issue compared to previous years. The average number of people employed has grown only marginally over the last two years, according to the report, and has been outpaced by the growth in turnover, leading to businesses becoming more stretched.

Sharon Jones, business and partnerships director at Creating Enterprise – a building and maintenance social business based in north Wales (pictured above), and recently named the NatWest SE100 Social Business Award Growth Champion – said social enterprise has recently been a “real growth sector” in Wales.

But she said more could be done to support it through government procurement. There are “really good examples” of this happening, but in “isolated pockets rather than on a wider level… It’s moving in the right direction, just not as quickly as I’d like it to have happened.” Wales boasts a Well-Being of Future Generations Act, which requires public organisations to consider the long-term effects of any decision on the wellbeing of people and the environment. Jones said this has been “a bit slow” to take effect, but is starting to appear in public tenders.

27% of leadership staff are aged over 65, compared with just 11% across the UK

Finding and keeping good talent is also a challenge for fast-growing companies, said Jones, especially in north Wales, while many business leaders surveyed for the research cited succession issues: 27% of leadership staff are aged over 65, compared with just 11% across the UK.

The average number of employees among Welsh social enterprises is 27, though the majority employ less than 10.

Lisa Marie Brown, director of the regeneration and construction training enterprise Pinkspiration, said being small makes it easier to be well-connected to others including government, universities and community groups. Being small also helps get new initiatives moving quickly. “For larger social businesses, it can take a lot longer to get projects out to the grassroots where it really matters,” she said.

Social Business Wales is an £11m project, funded by the EU’s European Regional Development Fund and the Welsh Government, and delivered by the Wales Co-operative Centre. It offers specialist services to help social businesses expand their products, services and markets, and to assist charities to set up trading arms.

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