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Report reveals growing impact of social enterprises on public sector

A new report into social enterprises has found they are being set up at triple the rate of mainstream SMEs and half are trading with the public sector compared to just 26% of SMEs. 

‘The People’s Business’ is being launched at Westminster today by business secretary Vince Cable.

It shows that for 23% of social enterprises, trade with the public sector is their main source of income, and nearly a third of them saw the amount of work they do with the public sector rise over the past year.

Social enterprises whose main source of income is trade with the public sector are more likely to have made redundancies last year than those for whom it is not.

There has been an increase since 2011 in the number of social enterprises working mainly with the public sector who cite procurement policy as a principal barrier to their sustainability – up from 25% to 34% now.

The report, released by Social Enterprise UK and supported by The Royal Bank of Scotland Group, also shows that social enterprises are much more likely to be led by women than mainstream businesses. It reveals that 38% of social enterprises have a female chief executive, compared with 19% of SMEs and 3% of FTSE 100 companies.

The report urges the Government to implement the Public Services (Social Value) Act to its full effect to help smaller social enterprises can compete, and says that policymakers and investors should recognise that grants and ‘softer’ social investment remain ‘critical parts of the mix’ for many social enterprises.

Peter Holbrook, Chief Executive of Social Enterprise UK, said: “Social enterprise is steadily proving that it has an important role to play in bringing about an economic recovery and lasting social change. Entrepreneurs are using business to regenerate and rebuild their local communities, often where it’s needed most urgently to tackle the causes and effects of deprivation.”

Susan Allen, chief executive of the Customer Solutions Group at The Royal Bank of Scotland, said: “It is particularly striking to see the diversity of both the leadership and workforce of social enterprise. It seems that the sector is not just ‘changing the way we do business’ but also changing ‘who’ does business.”

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