Chi Onwurah: ‘We intend to define what social enterprise means’
But the shadow minister for social enterprise tells Andy Hillier that Labour’s definition will not be too dogmatic.
It’s more than 18 months since Chi Onwurah was appointed shadow minister for social enterprise, but for most of that time she has said little about what, if anything, Labour would do to encourage the UK’s social business sector.
But in July she announced that a Labour government would allow local and central government to offer some contracts "exclusively for organisations in the pursuit of a public service mission". The announcement was welcomed by the social enterprise sector; two months later, however, the think tank NPC questioned this approach, arguing that ring-fencing contracts could result in poor performance.
Onwurah says the NPC’s response was based on a series of misunderstandings and she is keen to iron out the confusion. "We want to give central and local government the ability to target certain contracts at social enterprises and organisations with a social purpose," she says. "It’s not about providing an opportunity for social enterprises to grab more public sector contracts."
It’s not about saying that incompetent social enterprises should get preferential treatment over organisations without a social purpose
She says that Labour, if elected, would ensure that government departments placed a greater emphasis than they do currently, during the procurement process, on the additional social value that organisations bring. But, she says, "it’s not about saying that incompetent social enterprises should get preferential treatment over organisations without a social purpose".
The sector has thrived under the coalition government: a Social Enterprise UK survey indicates that such enterprises are starting up at three times the rate of small and medium-sized businesses. The sector’s expansion has been attributed partly to the government’s creation of a favourable environment for social enterprises by, for example, opening up more public sector contracts to outside providers.
Onwurah, however, rejects the notion that the current government is more supportive of social enterprise than Labour. "Ed Miliband was the first minister for the third sector," she says. "Under Ed’s leadership, we put in place much of the current infrastructure, such as community interest companies and Big Society Capital."
Two years ago, the Public Services (Social Value) Act 2012 became law, raising hopes that more contracts would be awarded not on price alone but on the additional value that an organisation brings; but it has not had the impact some had envisaged.
Onwurah shares the view that the law as it stands is too weak and action is required. "We felt that a number of important bits of the act were taken out," she says. "The government has announced a review of the act and we have also said that we would review it. In particular, we’ll look at extending it to cover goods and services."
Other issues on Onwurah’s radar include providing additional support to help charities become more entrepreneurial, making more loan finance available to social enterprises and resolving some of the problems with government procurement, such as the use of payment by results. She is also keen to tackle the recurring gripe about which organisations should be allowed to call themselves social enterprises. "When we say that contracts can be targeted only at organisations with a social purpose, we will define what that means," she says.
For her, a social enterprise not only gives something back to the community but also treats its employees well. "We would not include organisations that exploit interns or pay the minimum wage in our definition of social enterprise," she says.
But she says Labour is wary of becoming dogmatic in its approach to social enterprise. "We want to retain the diversity and current growth, so we’re trying hard to strike a balance between being too prescriptive about what a social enterprise is and strengthening the brand," she says. "We see social enterprise as the cutting edge of the public sector and the future of a significant proportion of the private sector."