Levelling Up: A missed opportunity to reform capitalism, say UK social enterprise leaders

Critics of the government’s flagship Levelling Up policy focus on reliance on business as usual, while others welcome introduction of Danny Kruger’s social covenant.

The UK government’s Levelling Up proposals are a missed opportunity to change the way we do business, UK social enterprise leaders claim.

The Levelling Up white paper was published yesterday afternoon and was much awaited by the UK’s social enterprises, co-operatives and community businesses that argue they can play a key role in reducing the gap between the UK’s richest and poorest areas.

The full white paper was preceded by a press release yesterday morning which revealed just some of the policies. Initial reactions from the social enterprise community were also lukewarm.

Proposals include a major overhaul of the distribution of power within the UK, including more devolution towards regional mayoralities and more investment in communities. 

But the 330-page paper only mentioned “social enterprise” four times and did not refer to co-operatives or community businesses at all, causing disappointment across the sector. 

Many welcomed the transfer of power towards the regions, but were concerned that the paper focussed only on public sector reform and did not give enough attention to the role played by the private sector in causing place-based inequality – and the need to embrace new ways of doing business to level-up the country.

Peter Holbrook, CEO of Social Enterprise UK, said: “Whilst there are a number of good initiatives in the document, it looks like the government is still trying to work with one arm tied behind its back.”

Reform should not stop at the council room, it needs to go through to the boardroom as well

He added: “The biggest part of our economy – the private sector – comes through without any significant challenges to it or proposals to reform it. The short-termism of business and unwillingness to back places in times of economic difficulty is a major reason why we are in the situation we are in… reform should not stop at the council room, it needs to go through to the boardroom as well.”

He said: “This is why we need to invest in social enterprises, a form of business which has proven itself to work in the toughest of markets and to have the staying power to truly transform lives and communities.”

Gareth Hart, founder of social enterprise Iridescent Ideas and former chair of the Plymouth Social Enterprise Network, said: “I think more needs to be done around driving a change in the way we do business in the UK. I’d like to see the government stress that we need businesses to put social and environmental purpose first to really level up the country.” 


Rethinking capitalism

Proposals relevant to social enterprise include a new law on social procurement that would make it easier for “small businesses and social enterprises across the country to bid for and win public contracts”. The Social Value Act already requires public authorities to consider social value when awarding contracts, and it is unclear whether the new law would complement it or replace it.

The paper says government will “consider how best to encourage social organisations and entrepreneurship” in left-behind areas and what social enterprises need to do to thrive in disadvantaged areas, but no further details were included.

The government also plans to allocate £44m of dormant assets money to Youth Futures Foundation, Access Foundation and Fair4All Finance to support social enterprise and charities. The three organisations had already received dormant assets funding in the past.

Whilst there are some interesting reforms to the public sector, there is nothing on the private sector

Andrew O’Brien, head of external affairs at Social Enterprise UK, tweeted: “Whilst there are some interesting reforms to the public sector, there is nothing on the private sector. Given most decisions that affect local areas are taken by business, it is relying on the state (local and national) to do a lot of heavy lifting.”

Paula Woodman, head of global social enterprise at the British Council, called for a fundamental change of approach to business and capitalism. She tweeted: “Our issues with inequality are systemic and we must treat the cause not (only) the symptoms. We need a new economic story #stakeholdercapitalism #regenerative #socialenterprise based on #mutuality and our shared humanity.”

Professor John Bryson, chair in enterprise and economic geography at Birmingham Business School, echoed the call for a new approach to capitalism. “Any policy targeted at economic growth can never be sustainable,” he said. 

“The levelling up agenda needs to be positioned around a debate that is not based on closing the gap between the richer and poorer part of the country, but instead must be framed around facilitating place-based responsible inclusive prosperity.” 


Community power

Wolves Lane Community Business Power to Change small

Above: The Crop Drop team at Wolves Lane in London, a community business. Credit: Power to Change

Also yesterday, the government issued its response to Conservative MP Danny Kruger’s report published in September 2020 Levelling Up Our Communities: Proposals for a New Social Covenant.

The government commissioned the MP, who chairs think tank the New Social Covenant Unit, to develop proposals to support the community response to Covid-19 and set out how civil society could contribute to levelling up. 

One of the main recommendations of the report was the creation of a new “social covenant” – a type of social contract that would share power between citizens, civil society, businesses and the state to create a shared approach to address local challenges, improve places and improve public services.

The government has promised to start piloting the scheme. This was welcomed by Ailbhe McNabola, director of policy and communications at Power to Change, an independent trust that supports community businesses in England.

But she warned that while this was a good first step, to ​​limit devolution to metro and county mayor level was a “missed opportunity”. 

She added: “For levelling up to succeed, it must go further and empower people at a neighbourhood level because local people are best placed to understand and deliver against the needs of their communities.”

Top picture: a street in London. Credit: Alan Stanton on Flickr

Thanks for reading Pioneers Post. As an entrepreneur or investor yourself, you'll know that producing quality work doesn't come free. We rely on our subscribers to sustain our journalism – so if you think it's worth having an independent, specialist media platform that covers social enterprise stories, please consider subscribing. You'll also be buying social: Pioneers Post is a social enterprise itself, reinvesting all our profits into helping you do good business, better.