The Editor’s Post: Half measures – does the UK government truly understand social enterprise?
Has the UK government siloed off social enterprises and charities from the rest of the economy? This week’s view from the Pioneers Post newsroom.
“Splashing about in the waves on a beach, rowing along a river.” UK government environment secretary Steve Reed was in a nostalgic mood during his speech on Monday, invoking childhood memories of playing in and around the country’s lakes, rivers and seas.
But, there’s a catch. Reed was presenting a vision of 2030. By then, the government promises, sewage pollution will be halved in England and Wales. At that point, Reed said, we can get back to enjoying the country’s waters.
Reed’s speech was in response to the publication of the most significant review of the water industry in England and Wales since 10 companies were privatised in 1989. The Independent Water Commission made 88 recommendations for how the government can deliver “fundamental reform” of a sector which has been subject to fierce criticism in recent years, focused on rivers and seas filling with waste, and a lack of investment in infrastructure at the same time as shareholders have been receiving generous payouts.
The “outstanding report” was welcomed by Reed. The government has immediately fast-tracked five of the recommendations, focused on strengthening regulation of the industry, with the scrapping of regulator Ofwat grabbing all the headlines. “Today marks the start of a water revolution,” said the minister.
Can the report’s recommendations deliver the change Reed has promised? Impact economy experts and environmental campaigners say no, as I reported this week. Instead, critics said the commission missed a “once-in-a-generation” opportunity for radical reform and its recommendations ignore potential social enterprise solutions for the sector.
Crucially, the commission was prevented by government from considering using public funds to restructure water companies into alternative ownership models, like social enterprises, or nationalising them, because ministers had concluded that such restructuring would be unaffordable.
Philip Kirkpatrick, partner at law firm Bates Wells and charity and social enterprise specialist, pointed out to us that the report contained prejudicial stereotypes regarding alternative ownership models, suggesting they are less investable, have overly complex governance and lower management competence.
This overlooking of social enterprise solutions and an outdated attitude towards the sector stand in stark contrast to the government’s recent positioning in relation to the impact economy, as demonstrated by the launch of the Better Futures Fund, the new Civil Society Covenant and the recruitment of a head of impact investing and philanthropy for the Office for Investment.
It does perhaps demonstrate that ministers view social enterprise as firmly part of the ‘voluntary’ sector, with which it is grouped in both the Civil Society Covenant and the Independent Water Commission report. Ministerial responsibility for social enterprise has remained within the Department for Culture, Media and Sport, rather than in any business-focused departments since 2016, to widespread disappointment.
But, as the Pioneers Post audience is acutely aware, social enterprises are businesses, which can thrive in competitive marketplaces. One only need see the range of successful, sustainable businesses celebrated in last week’s SE100 awards to see ample competence and commercial acumen on display.
Or listen to our latest Good Leaders podcast with June O’Sullivan, the multi-award winning CEO of the London Early Years Foundation (LEYF). O’Sullivan, our WISE100 Social Business Woman of the Year 2025, led the transition of LEYF from a small, struggling charity into a successful business, with a clear social justice mission at its heart. LEYF now has an annual turnover of £40m and runs 43 high quality nurseries, employing around 1,000 members of staff.
Does the government truly understand the scale at which social enterprise can operate? Or does it view social enterprises alongside charities only as capable delivery partners for local projects, but not able to cut it in large, cut-throat marketplaces like the water industry? If we were to be uncharitable (Ed: that’s a terrible pun!) could we say the government has siloed off what it sees as the fluffy, nice organisations – social enterprises and charities – distancing them from Rachel Reeves’s attempts to kickstart growth?
Perhaps by 2030, when we’re all swimming around in 50% less sewage, the answer will be clear.
This week's top stories
‘A decent CEO sticks around when things are hard’ – June O’Sullivan, CEO of the London Early Years Foundation, on the Good Leaders podcast
OpenAI launches US$50m fund to support nonprofit and community organisations
The Impact World this Week: 24 July 2025
Image: UK government environment secretary Steve Reed (credit: House of Commons, Flickr)
