The three pillars of the social economy

St Austell Bay Economic Forum is one of 30 organisations in the government-backed Community Economic Development programme

What’s needed to scale the social sector? Support from government, inclusion in decision-making processes, and growth, says Alan Southern

We can make local economies work better. We can make them more ‘inclusive’ by supporting the social economy. For localities, the social economy provides great potential and opportunity; scale can be achieved, good employment provided and wealth created and distributed in fairer ways.

To make this happen we must concentrate on the three pillars of the social economy:

1. Firstly, the social economy needs explicit support from government. Whether national or local, one of the most important things needed to develop the social economy is to secure formal government support through policy, legislation and regulation, thereby creating a different language about the sector. Current policy, at best, nudges changes in behaviour when it comes to social markets and economies. The social value act and localism act are both examples of this with good intent, but limited in the way they can help social and community organisations. Explicit support from all levels of government would provide a positive narrative about the social economy, and drive policy that translates into public contracts for social enterprises, and real support and resource for community-owned assets.  Such support would overcome the social economy simply being tagged onto a language of market opportunity. Instead, the message from government would be about the way social justice and wealth creation can be pursued simultaneously.

2. Secondly is the importance of governance of the social economy itself. How do we incorporate the social economy into the decision-making processes of the local economy? While city region devolution and the local enterprise partnerships (leps) allow some degree of strategic development, this must be opened up so that the voice of the social economy is heard in the committee meetings and working groups where decisions are made on how resources are allocated. However we must not assume that the social economy can speak with one voice. So, those in the local social economy have to ensure their own processes support democratic participation; they must work to accommodate all types of opinion found in the diversity of social organisations and ensure the large (organisations) do not dominate the small. Through its own internal humility and ability to organise, the social economy can provide a strong and confident voice in the changing character of local governance.

3. Thirdly, is the need for tools and methods to grow the social economy. There is a view that the problem with the social economy is that is cannot be scaled and this view is used to limit growth. Yet there is much evidence that scale can be achieved, with examples from overseas, in Quebec and Mondragon for instance, and in the UK’s housing association sector. We should create the conditions for scale to occur before saying it cannot happen. To do this we need to develop new forms of financing to help small, under-capitalised social organisations to grow. Better forms of finance can deliver patient capital with a focus on the social mission and a preparedness to wait for returns on investment. There is a need for greater variety in finance, with different amounts for different purposes and stages of growth and to demonstrate solidarity with the social economy through a more coordinated provision. Alongside this is a need for investment into the capacity building by focusing on management and campaigning skills and formalising in-work training alongside college and university education courses. The aim would be to enable the smaller organisations to achieve sustainability and encourage more to participate in the sector. We should learn from our experiences in regeneration and not seek to professionalise the sector in the same way. Instead we can intensify the spirit of the social mission and shape our other institutions to support the three pillars of the social economy: government, governance and growth.

• With apologies to my colleague Marguerite Mendell at Concordia University, Montreal, who first used the title the Three Pillars of the Social Economy.