Structural funds (or cohesion funds as they are also known) form a key part of the EU’s regional policy, and account for around 35% of all EU spending. They are designed to reduce disparities in income, wealth and opportunity across member states. The largest of these are the European Regional Development Fund (which has typically financed infrastructure projects) and the European Social Fund (which has typically financed services to support employment and training). The EU budget runs on seven year cycles and the budget for 2014-20 is now being set. The UK will receive around £9.1Bn in structural funds over that cycle. However, the way in which the money is distributed and the priorities for what the funds should be spend on are set at a national level (with the devolved nations making their own arrangements).
So what is the opportunity for civil society and more specifically social investment? Previously the sector has only been able to access small amounts of these funds. This has mainly been to support the sector’s role in delivering training and employment support programmes. In a few cases, for example in the North West, structural funds have been used to help create investment vehicles which social enterprises have been able to access. But in most cases regulations and reporting requirements for the funds have been very complex and contracts have been too large for social enterprises to access.
However, there is a big opportunity for this to change. Policy makers at both an EU and domestic level are increasingly interested in how social enterprise can be a driver of growth and build stronger, more resilient communities. The European Commission’s Social Business Initiative includes a range of policy initiatives and has helped to raise the profile of social enterprise at an EU level. The UK government is working both on supporting the growth of the social investment market and reducing regulatory and bureaucratic barriers to running a social enterprise. So officials at both a Brussels and a Whitehall level are looking at how the structural funds can work with the sector more effectively to delivery their broader outcomes.
Just before Christmas a coalition of leading figures in the social investment market wrote to Michael Fallon, the lead minister on the structural funds, to outline three ways in which, by helping the grow the social investment market, social enterprises would be better placed to deliver the goals of the funds. These are:
• Providing more opportunities for social enterprises to earn revenue through delivering contracts funded by the structural funds;
• Providing capital to help build new social investment funds, and in particular taking some of the risk away from other investors who may not otherwise come into the market; and through
• Providing capacity building support to help more social enterprises become investment ready.
Our letter received a positive response and we are meeting with lead officials in BIS later this month. The Government has also indicated that Local Enterprise Partnerships (LEPs) are likely to play a key role in the delivery of structural funds across the country; and ensuring that the sector is well connected with LEPs will be critical to realising this vision.
These spending priorities will be signed off by ministers in the next few months and therefore a united voice from the sector is important. I am looking forward to the discussions at the E3M conference: Growing Successful Social Enterprise in March to help move these discussions forward.
Seb Elsworth is Director of Partnerships and Communications at The SIB Group.
The SIB Group is a sponsoring partner of Growing Successful Social Enterprise, a major European conference taking place on 4-5 March 2013 www.successfulsocialenterprise.eu