UK policy failing to factor in social businesses – Social Enterprise UK
UK social enterprises are falling through the gaps in “short-sighted” government support during the coronavirus crisis, leaving vulnerable communities, beneficiaries and staff exposed.
This is according to research due to be published today by Social Enterprise UK, the country’s support body for the sector.
“Social enterprises are nominally included in government support packages,” points out the report. “But shortcomings and short-sightedness in the design of support are symptomatic of longstanding challenges in how public policy considers social enterprise, or, indeed, fails to.”
Social Enterprise and Covid-19 sets out findings from the first 231 respondents to a survey of social enterprises’ responses to the UK’s lockdown due to the coronavirus pandemic, which began on 23 March and remains in force today.
Economic cost could hit £2.5bn per month
“Time is of the essence, as we estimate that half of the social enterprise sector could run out of cash by June, unless action is taken,” says the research.
This could lead to an economic cost to the UK of £2.5bn for each month that the coronavirus lockdown continues, it points out.
“Once these businesses disappear, it will take years to rebuild. Their loss will drag our economy down and unnecessarily elongate our recovery.”
While social investors have in recent weeks stepped in with emergency loan facilities, grants rather than loans appear to be much more in demand. Prior to government support being announced, 79% of respondents in the SEUK research said a grant would most help their business, compared to just 7% who said a mix of grant and loan money (and 0% said loans would be most helpful).
We face an ethical dilemma of possible closure of business to claim 80% support when we have very vulnerable people desperate for us to remain open to support them – social enterprise respondent
Furloughing is useful, but much other support is not
The UK government’s current support to businesses, including social enterprises, includes loans, business rate reliefs, tax payment deferrals and grants.
The research points out that the government’s Coronavirus Job Retention Scheme, in which the government pays 80% of the wages of staff who are “furloughed” (temporarily laid off), “appears to have been useful to some social enterprises”. About half the organisations polled are currently using or plan to use the scheme.
But it points out that there are three broad problems with the government support from social enterprises’ point of view.
1. Ineligibility: 83% of social enterprises reported that they do not claim any form of business rates relief, making them ineligible for business grants.
In addition, the National Lottery Community Fund’s grants are not available to some social enterprises because of their legal form.
2. Inappropriate: for some social enterprises, furloughing staff is the only support option available, but it isn’t in beneficiaries’ best interests to close important services when they are at their most vulnerable.
One respondent, whose social enterprise supports survivors of abuse, commented: “We face an ethical dilemma of possible closure of business to claim 80% support when we have very vulnerable people desperate for us to remain open to support them.”
Additionally, many social enterprises cannot afford to repay commercial rate loans.
3. Insufficient: the report argues that no funds have been provided to support social enterprises working in health and social care, which are currently facing significant demand.
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