What should social enterprise be doing in order to win the trust of workers and trade unions?

There’s a really interesting post on Chris Newis’s blog here about clashes between social enterprise and trade unions which are being provoked by the coalition government’s rush to externalise parts of the NHS. The story — workers at the Lyng health centre in West Bromwich staging a protest against Sandwell PCT’s plans to convert to a social enterprise — is covered on the BBC website here.

Chris’s post makes a number of important points, advocating that there should be not only a genuine consultation process involving workers and trade unions prior to any externalisation, but also that there should be employee-ownership training and that new social enterprises in the health sector (and elsewhere in public services) should be established as Industrial & Provident Societies rather than CICs because the IPS form enshrines democratic worker involvement.

There is a very real danger  that social enterprises and civic society organisations are being manoeuvred into position to assist in the dismantling of the welfare state. And yet the Social Enterprise Coalition has broadly welcomed the plans, albeit with minor reservations about the kind of definition the government is using when it talks about foundation trusts being ‘social enterprises’, and ACEVO’s deputy CEO, Dr Peter Kyle, has been quoted as saying that the sector will greet the white paper commitment to deal with any willing provider with “a sense of relief and enthusiasm”.

If the sector bodies that represent us and to which many of us pay membership subs are determined to ignore the politics of the situation and simply act as cheerleaders for mutuality at any cost, then they are failing us, failing public sector workers, and failing communities.

These are issues that go to the heart of what the sector is about, what its values really mean, and what its politics are.

  1. james Reply

    Well, I guess the answer would be:

    * match pay and pensions
    * offer greater involvement in decision-making

    But the whole point of getting social enterprise to deliver public services is precisely to reduce the cost of pay and pensions.

  2. Simon Lee Reply

    Thanks, Alun, for the useful link to Chris Newis’ blog, which I’ve just read.

    He highlights some key issues (as do you) as to the potential problems that can be caused by social enterprises coming out of local authorities / PCTs.

    However, I would differ with Chris on a few points relating to CICs. First, he says that in many cases the CIC is being used to disguise profits being taken out by way of dividends. In my experience most CICs are actually companies limited by guarantee rather than by shares, and so no dividend can be taken because there are no shares.

    Second, he says that CICs provide poor involvement for stakeholders and users. This is not an issue about CICs per se, but rather about the way they are set up and run. In fact, on the annual CIC Report that all CICs must file, they are required to report on how they have liaised with their stakeholders and what they have done to benefit the community they have been set up to benefit.

    Third, CICs can be set up to enable employee-ownership. I understand that the Right to Request from Hull’s PCT has all shares owned by employees, and one I am working on at the moment is due to be set up in the same way.

    Fourth, the legislation around IPS (industrial and provident societies) remains fairly archaic – from the 1960’s – while the Companies Act 2006 represents a large overhaul and modernisation of company law.

    In terms of unequal pay and pensions across groups of staff in social enterprises, I should firstly say that I am not an employment law specialist and so may not have understood correctly, but I thought that under TUPE and pensions legislation any transferring staff have to keep the same terms and conditions and have access to a broadly equivalent pension scheme. As for a ‘two-tier’ workforce, these are only the same issues that other employers need to deal with in a TUPE situation.

    All this is not to negate the general concerns raised about whole-sale externalisation of services from the public sector to social enterprise – they are serious issues and must be properly considered. Neither is it to say that CICs are the perfect answer – their use must be considered carefully on a case-by-case basis.

    However, for what it’s worth, I think that social enterprises in general, and CICs in particular, can have a positive and useful role to play in public service delivery.

    • Alun Severn Reply

      Simon — Thanks for commenting. I agree with much of what you say but in the final analysis I suspect that the interests of social enterprise and of public sector trade unions are largely irreconcilable.

      You note I don’t say ‘of public sector workers’: here, I think *some* do see the benefits of social enterprise and welcome it — as has already been seen. But as regards the public sector trade unions I am increasingly convinced that there are no arguments one could make which would convince them that having their members’ jobs either cut or hived off to a social enterprise represents good sense. After all, trade unions are not in business to bargain away members’ jobs.

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