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How councils can help boost the social economy

Financial pressure on both the public and private sector has meant a greater need to work together dynamically so that both sectors continue to thrive. Civic businesses which aim to achieve social and community benefits as well as financial gains are growing and offer the option for collaborative working. The social economy plays a vital role in our communities.

Anecdotally it is suggested that businesses of this type are beneficial to councils as they relate differently to the communities they serve. In economic terms, more of the money spent in them is liable to stay and re-circulate in the local area and they are more likely to procure goods through local supply chains.

Due to the budgetary pressures being felt by councils it is, however, a big ask to suggest they should invest in business without sound place based evidence of long term gain. This is not to say it is not an important investment to make, but rather, as Indy Johar suggests ‘councils are big organisations that have lived and operated in one way and to shift their power base and perspective to be able to deliver this is a huge ask’. Not impossible – but huge.

A successful local economy will mean different things to different councils. For some it is about supporting social entrepreneurs to succeed in challenging economic times. For others it will mean attracting large-scale inward investment to boost growth and jobs. Or it could mean both, just in different areas of the borough. Both are important. Centre for Cities research demonstrates that the most successful cities are those which have a high proportion of branch businesses and high levels of enterprise. So what could a contract between the social economy (such as a reinvented corner shop) and local councils look like?

MODELS OF MUTUAL BENEFIT
If providing financial help (for example rate relief or a grant) councils could build caveats into the provision of support. For example, in return for rate relief or discounts, the reinvented corner shop could be expected to provide something that meets the council’s priorities, (perhaps a befriending service for isolated older people, employment opportunities or training). Queens Parade in Willesden Green has followed this model in partnership with Brent Council and the Greater London Authority.

SOCIAL INVESTMENT FUNDS
Councils are less financially able to give out grants and so are exploring alternative means of supporting the civic economy. If they chose to position themselves as strategic investors in the civic economy councils may realise three benefits: supporting a new and growing business model; having businesses in their area which give back to the community; and in theory a return on their investment as the business becomes established (especially with the proposed move towards business rate retention in the local government finance bill). Some examples of investment in social enterprises providing services do exist but there are a lack of examples in relation to civic business involved in the local economy.

ENABLING CITIZENS TO BECOME SOCIAL INVESTORS
Councils can support citizens themselves to invest in civic businesses. Instead of providing the funds themselves (especially where funds are scarce) the council can be the platform which enables local investment. Bristol Council’s Building a Better Bristol project seeks to develop new mechanisms that support co-financing with the local community.

PROCUREMENT AND COMMISSIONING

Procurement is a major tool at local government’s disposal for supporting certain types of businesses. When buying goods local government can start to consider how their purchasing can support the civic economy. Durham County Council has developed a sustainable commissioning and procurement policy that aims to ensure the development of a more sustainable local economy. London Councils has also developed a Procurement Pledge which asks all London boroughs to factor the creation of employment and skills into their procurement procedures. This has been endorsed by all London council leaders.

  • Read our feature on the reinvention of the corner shop here and the first column in the series, by Julian Dobson, here. The second column, on the rise of the civic corner shop, can be read here.

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