Senscot Blog: The reality behind the Social Enterprise Census 2017 figures
The coverage given to the Scottish SE Census 2017 was inevitable and welcome; having a second, comprehensive data set about this growing sector presents the first real opportunity to understand emerging trends and paint an accurate picture of Scotland’s social economy. What is equally important, however, is not to lose sight of the some of the starker facts about our sector that lie within the vast amount of impressive data that has been produced.
There are many positives to be taken from the latest round of data, for which Jonathan Coburn and Social Value Lab deserve huge credit for compiling and crunching.
The fact that the average pay differential between the lowest and highest employee at social enterprises in Scotland sits at 1 to 2.5 is encouraging, demonstrating a commitment to eschewing the kind of inflated salaries that are so prevalent in the private sector.
70% of social enterprises responded that they are led by and accountable to people in their local communities, underlining the adherence to good governance that underpins the social economy. This notion that social enterprises are committed to responsible business is reinforced by the fact that 75% of social enterprises in Scotland currently hold charitable status.
Another positive to come from the Census was the fact that the number of social enterprises which generate over half of their income from trading has increased to 61%, suggesting a gradual move away from grant dependency across the sector.
These figures have been warmly welcomed across the social enterprise community, and rightly so, yet scratch beneath the surface and it becomes apparent that Census has also produced certain insights that deserve more cool-headed analysis.
The headline statistics pulled from the data do not tell the whole story – they are perhaps overly optimistic. With the number of social enterprises in Scotland increasing by over 400, currently contributing £2bn in gross added value to the Scottish economy, they suggest that the sector has maintained a steady and healthy growth since 2015.
Meanwhile, a total income of £3.8bn across all social enterprises has been heralded as evidence that this is a sector in rude health, increasing its economic impact year on year.
In reality, though, the data is heavily skewed by the sheer economic clout of housing associations and health and social care providers. Taken together, they represent 16% of all social enterprises but account for a staggering 70% of the total income across the sector.
Credit unions also experienced a surge in their income, jumping 11% in two years from £30m to £33m overall, further inflating the figures which many have jumped upon to signify a sector which is experiencing growth across the board.
In fact, the situation is quite the opposite – registered social landlords and credit unions alone increased their combined income by £302m, while the combined income of every other social enterprise in the country was down by £84m.
The Census itself states that “in the latest year, the smallest 82% of social enterprises contributed just 2% to the overall financial surplus produced by the sector, while the largest 4% of organisations contributed 72%.”
Large-scale social enterprises are a rarity, an anomaly. A huge 57% of SEs turn over less than £100k, with 73% bringing in less than £250k annually.
What these figures show is that the vast majority of social enterprises in Scotland are small-scale operations which are just about able to wash their faces financially; many, however, are struggling to enjoy the economic growth that the sector overall is said to be experiencing.
It is worth noting, however, that their inherently small size doesn’t mean to say that they’re not already making a hugely positive impact on their local community.
Conversely, it is perhaps because these social enterprises are limited in their scope that they remain so closely connected and integral to their communities, plugging vital gaps that emerge in public services or private sector alternatives.
Another aspect of the Census data which perhaps deserves more scrutiny is the fact that “social enterprise activity is not yet taking hold in large numbers” across a number of local authority areas, most of which suffer the highest level of deprivation.
Only 17% of social enterprises are based in Scotland’s most deprived communities. Yes, there are mitigating factors, including SEs which work across multiple local authorities or have a head office in the nearest city, but overall there remains a surprising lack of SE activity in the poorest areas of Scotland.
In the ten most deprived local authority areas of Scotland, only Glasgow City numbers more than 10 social enterprises per 10,000 people, with 12. Compare that with Stirling (16), Argyll & Bute (28), Orkney Islands (29), Na h-Eileanan Siar (41), Moray (41) and Shetland Islands (44).
Given that social enterprises are, for the most part, designed to offer a hand up to the most disadvantaged in society, there should be questions asked as to why the most deprived areas of society seem to be, on the surface at least, under-represented when it comes to the presence of social enterprises.
That said, the Census has shone a light on the social enterprise sector and has highlighted a raft of positives. The number of social enterprises is increasing; the ratio of grant dependency is decreasing; over 81,000 FTE employees are supported by the sector; and the net worth of Scotland’s social enterprises has increased.
This is a sector which is taking hold in Scotland and has every reason to be optimistic about its future, not least because it is particularly well-supported by the Scottish Government.
Nevertheless, we must be careful to heed the more concerning insights this research has thrown up and start asking the whys and hows, rather than simply celebrate the positives.