What’s in and what’s out? Counting social enterprise in the UK

In just the past couple of months four extremely important social enterprise-related reports have been published.  Anyone wanting seriously up-to-date UK facts and figures for the social enterprise sector needs to have a look at least at the exec summaries of these reports. But there is a health warning: you are going to have a struggle to understand just what is being counted. The four reports  are (click the graphics to go to each):

Small Business Survey 2012_ SME Employers.

The Small Business Survey 2012: Dept for Business Innovation & Skills

 

Social-Investment-Report1.pdf

 

 

 

 

 

 

 

Growing the Social Investment Market: The Landscape & Economic Impact

 

Social_Enterprises_Market_Trends_-_report_v1.pdf

 

 

 

 

 

 

 

Social Enterprise Market Trends: Based upon the BIS Small business survey 2012

And finally — and the most familiar and in some respects most dependable for our purposes:

the_peoples_business.pdf

 

 

 

 

 

 

 

Social enterprise: The People’s Business — the state of the sector survey 2013, SEUK

The BIS Small Business Survey 2012 informs the other three reports and all draw on its data.

To my mind, SEUK uses the BIS data in the most conservative (and dependable) way and estimates that there are 70,000 social enterprises in the UK (enterprises that self-defined themselves as a social enterprise and generate 26%+ of income from trading activities). These social enterprises contribute some £24bn to the national economy and employ about 1m people. This baseline is equal to (and draws on) the classification that is used in the Social Enterprise: Market Trends report  of ‘very good fit’ social enterprises. (Have a look at p.4 of Market Trends and see if you can follow the distinction that is being made between ‘very good fit’ and ‘good fit’ social enterprises. I can’t.)

A baseline of 70,000  social enterprises, then, seems entirely plausible and is in line with SEUK’s own findings, both past and current,  as well as BIS figures going back to the mid-2000s.

But the other figures in Social Enterprise: Market Trends are frankly bewildering — both in their size and in what is being counted. For instance, if sole traders and businesses with no employees are also included, the report explains, then the total number of ‘very good fit’ social enterprises is 283,500 and the number of ‘good fit’ social enterprises 688,200.

Now, I’m all for inclusivity, and I do acknowledge that the face of the sector is changing, but even so, there are huge problems with this approach. The difference between a baseline of 70,000 social enterprises and almost ten times that number  suggests an interpretation of social enterprise so broad as to be almost meaningless. How can this help anyone understand what the sector actually looks like, or the types of businesses in it? We might just as well say “businesses — some of which have a bit of social purpose to them….”

Thanks to my old friend Chris Newis at CROWN — our phone discussion this morning prompted this post.

Birmingham UK. Freelance research, evaluation and policy consultant specialising in social enterprise and the third sector. I maintain the BSSEC blog and website
  1. Dave Lane Reply

    Hi Alun,
    Thanks for highlighting the four reports and making it easy for us to access them, very helpful and useful. You must have had a few sleepless nights to manage to get through these, guess the weather has helped.
    I haven’t read the reports as yet, but will, sleepless nights pending of course, but the thing that bothers me about all of this is “self-defined” and 26% plus earned income.
    Now I have no problem with organisations that are aspiring to be social enterprises and understand that all have to start somewhere, but having 26% earned income is hardly the balance in the right place and doesn’t fit what was commonly recognised (I know that it’s not universal) as a benchmark of “primarily” trading i.e. 51% plus.
    So I’d like to see (and maybe this can be drawn out of the report, so say this with the caveat of I haven’t read them yet) how many are self defined and earning more that 51% and how many are perhaps a better term than “good fit” would be “aspiring” earning between 26 and 50%. I’m not sure how or when we (the sector) came to the conclusion that a quarter of earned income made a social enterprise, but that’s just me.
    All the best
    Dave

  2. Alun Severn Reply

    Thanks, Dave. I think a threshold of 25% earned income from trading has been adopted in the past (including by BSSEC, in fact) because it captures younger SEs and those moving in the direction of the SE business model. There are at least some valid arguments for pitching earned income at this level rather than 51%+.

    BUt what — to my mind — really does the sector no favours is the inclusion of sole traders and those without employees (as BMG Research has done in the BIS data and in its later Social Enterprise: Market Trends report.

    That makes quibbles about 25% vs 51% pale into insignificance!

    And I really haven’t read anywhere near as much of each report asI need to – sleepless nights not withstanding…

  3. Dave Lane Reply

    Hi Alun,
    Point taken, I don’t think I was suggesting we shouldn’t capture younger SE’s hence the point about “aspiring”, but I do think there is something to be said about SE being a business model (trade).

    I totally agree with you about the sole trader issue, as there are other significant issues (for example accountability) that make a social enterprise (in my humble opinion of course).

    We know that different people define an SE differently, so it’s back to that old gem, the definition, but I’m not proposing that that debate gets opened up again right now, other than to say a sole trader certainly isn’t a social enterprise.

    Dave

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