Social Enterprise Unit change – responses

Social Enterprise Unit update.


(updated) 22.01.04


On January 7th the outgoing director of the DTI’s Social Enterprise Unit (SEU), Barbara Phillips, announced it had been decided to combine the SEU with the DTI’s Small Business Service. The following responses to the announcement have come in from leaders of the social enterprise community.



Glenys Thornton (Director, Social Enterprise Coalition):


Dear Barbara


I confess that I very worried by what is being proposed in your recent email – that the Social Enterprise Unit will be moved to become par of the Small Business Service.


I am most concerned that this positioning of the Unit is in effect downgrading the importance of work on social enterprise in the DTI and government as a whole, and the underlying message is that social enterprises are ‘small’ and mainly about social inclusion. We know that both of these are not the main thrust of the Government Social Enterprise strategy that was agreed only eighteen months ago. So, in my view this move will send quite the wrong signal. 


I will be seeking a discussion at a political level.


A few very serious questions immediately spring to mind. For example, just to take one, how will the important issue of the procurement agenda be taken forward in the robust fashion that is required, and battles fought and won with the ODPM, by the new SEU? Where will social enterprises that are large, like the FRC, leisure centres and co-operative sit in the new proposals? Since they are clearly not small businesses.


Other questions about budget, reporting lines, status of your replacement need to addressed.


I will be writing to the Secretary of State and Nigel Griffiths immediately.



Liam Black (Chief Executive, FRC Group):


It would be the kiss of death to move the Unit into the SBS and would undermine all the great work done by Babs and her posse. All SE’s should get behind Glenys as she storms upstairs, ermine flowing behind her. To the barricades, comrades!



Malcolm Hayday (Chief Executive, CharityBank):


Picking up Glenys’ point, it seems better that that part of SBS comes under SEU rather than the other way round. While we should not fear the mainstreaming of the activity, I would need a lot of convincing that the understanding and cultural identity is there to foster the work that

Barbara has kicked off rather than see it diminished.



Naomi Kingsley (Chief Executive, London Rebuilding Society):


Agree with Glenys, not that SBS havent done some great stuff, but it has been the clear and dynamic focus of Barbara’s unit which has really made the impact.  Also given how good they have been on consultation / involving all of us, I think we might expect more consultation on this decision – any chance of that?



Timothy Modu (Chief Executive, Community Investors):


I agree that some part of SBS should come under SEnU rather than the other way round. To me and some of the inner city SMEs we work with (particularly the Black & Minority Ethnic led enterprises), the current SEnU work to date and the social enterprise as a ‘Brand’ is perceived as far more credible and promising with fair trade opportunities than SBS brand. It will therefore be wrong for government to allow administrative convenience to override the very essence of creating SEnU as an independent unit working in partnership with all. Glenys, thank you for speaking up for us.



Stephen Sears (Chief Executive, ECT Group):


I would like to add my voice to those expressing concerns about the proposed integration of the Social Enterprise Unit with the Small Business Service. Whilst I appreciate that some progress has been made in the SBS its focus is still on small private business and the particular needs and motivations of social enterprises do not appear to be high in its understanding.  At governmental level the concept of social enterprise is a relatively new one and to subsume the effective Social Enterprise Unit into a larger organisation with an existing culture and mission seems to risk the progress that has been made so far.  The change of leadership of the unit that will occur at the same time will only compound this problem.


I also agree with the concern that the SBS is unlikely to be appropriate from the point of view of larger social enterprises.  Whilst this isn’t a major issue in itself it is important that government understands that social enterprises come in all shapes and sizes, we are not all small and local.


Finally, for many of us, our major market is in the provision of public services and this is where we expect some support from the Social Enterprise Unit in raising understanding across government and the public sector generally.  I believe that the role of the unit should not solely be to support the development of social enterprises, but should also be in raising the profile of the social enterprise alternative amongst organisations procuring public services and thereby influencing the business environment in which we operate.  I think that this will be a difficult role to fulfil from within the SBS where the clear focus is on direct support for business.



Andrea Westall (Deputy Director, New Economics Foundation):


I just want to add to the general comments that have been made. It has become fairly clear that the government mainly sees social enterprise as important in policy terms to social inclusion and also to public service delivery. This means that government is naturally more interested in certain parts of the social enterprise sector than others. The decision to move the unit under the SBS solidifies that position and will unduly harm the way that social enterprise is seen and the future development of the sector.


As has been noted by others, the sector is much more diverse than this and encompasses much larger enterprises from social and ethical businesses to co-operatives operating in mainstream markets and providing alternative methods of delivering key goods and services from international fair trade and commodities, to finance provision, high-tech etc. Much less attention has been focused on these areas both in terms of policy interest and broader awareness raising. This is partly because some of these organisations would rather see themselves as part of the business sector and don’t always naturally equate themselves with social enterprise, partly because of the current tendency to focus on small-scale and social exclusion issues. There is therefore a very important group of businesses operating in the sector and across the divide between social enterprise as currently seen and mainstream business, the kind of area where London Business School for example has been promoting its social business plan competition, where the large co-ops operate, and where social venture capital may well support the development of innovative new companies in future. It also  includes different organisational models such as Network Rail and options for public interest companies. To exclude these organisations and their potential development is to in effect make them less visible and to underplay the potential of social and environmental enterprise approaches to tackling a much greater range of issues than is currently seen or recognised. Alternative business models need to be part of the DTI agenda – enterprise for all requires that people can choose different ways to do business and by whom they wish to be employed. The DTI also has a CSR agenda. Surely the overlaps between corporate responsibility, governance and social enterprise also need to be recognised and explored.


I do hope that the unanimous concern over the change in status and positioning of the Social Enterprise Unit will be noted and the situation reconsidered after much greater consultation.



Liam Black (Chief Executive, FRC Group):


Brilliantly put Andrea! Can anyone see any benefits – apart form cost cutting – for this

proposed merger?



Andrew Robinson (Head of Community Development Banking, NatWest & Royal Bank of Scotland):


‘Unanimous concern?’  Hmmm.  We need to be honest about the varying degrees

of passion regarding these combined developments. Many institutions should be supremely challenged by the agenda being set initially by the Strategy for Success and subsequent work flowing from same (Bank of England Review, Local Government Procurement Policy, etc). Worse, we can’t ignore the fact that there are influential people in all sectors (including people on the list above, and both the DTI and SBS!) who privately express a view that social enterprise already has too high a profile, despite their public position on the subject — and some feeling quite threatened by the potential implications arising so are natural defensive/uncreative/uncooperative!


And there are individuals who will no doubt find it all too easy to resign themselves to the fact that the highly effective Mrs Phillips might be moving-on. However, for me, the privilege of close-working with the Social Enterprise Unit (like the Enterprise Team at HM Treasury) has reinforced my sense that the British civil service can be a very special thing, indeed.


I have been impressed by:


– how an incredible level of energy from a diverse range of stakeholders interested in transforming the UK enterprise culture has been harnessed/channelled;

– the way Barbara managed to attract young, bright fast-streamers such as Joanna Crellin and Jonathan Holyoak

– the way the unit exploited a ‘way of working’ that is entirely consistent with the behaviours I have come to associate with the best of the social enterprise;

– the positive outcomes (and profile) that such a small unit in such a short period of time with an infinitesimal budget has been able to achieve relative to other government departments working in related policy areas with significantly more resource;


They have done this by concentrating on the ‘space’ where the system has failed/or left open, constantly challenging the status quo, and encouraging a radical (steady!) transformation of personal and institutional practice as a result of the learnings/experience.  In essence, the unit has been singularly successful at promoting and living the values of what the Secretary of State has repeatedly maintained is a key objective of this government — ‘economic prosperity and social justice’.


Regarding the move to from the DTI to the SBS, I am both relieved and see an opportunity. The DTI is under huge pressure to simplify its programmes (and presentation of same), cut costs, shed staff, and the reality is the nature of the work should be owned by the SBS.  This is a done deal.


I understand the fear expressed in previous e-mails, but I sense things are beginning to change at the SBS.  At the very least, it discounts the possibility of the SEnU injecting a new sense of purpose and creativity into the way they work.  We must be pragmatic. Our energies should be put into ensuring that it is set-up to succeed in its new home, not fighting a battle we will inevitably lose.


Leadership will be key.  After all she has done, I can’t believe Patricia Hewitt would stand by quietly if she genuinely thought that all the energy we have put in over the past months was going to be snuffed out.  The related issue for me, and I suggest for all of us, is how we retain Barbara Phillips.  She is effective and I think a lot of people won’t appreciate how good she was until after she’s gone! At the very least can we apply our energies to keeping her for enough time to ensure a successful transition (okay, I know the other strength of the civil service is that it’s a faceless machine, and isn’t about personalities, but so a bank should be and everyone always complains when their bank managers moves on too quickly!?!). She has said she is leaving ‘for personal reasons’, but everyone has their price!



Glenys Thornton (Director, Social Enterprise Coalition):


Dear Andrew


I am now sending you a public response to your email. You are quite correct to sing the praises of the civil servants, and particularly Barbara, who will be sorely missed. In a way everybody who has written this is a ‘given’, which is why there is such wide spread disappointment about the manner of communication as well as the actual proposal. I do not think that any of us involved need to be reminded about the value of the effort, work and openness of the people we have wroked closely with for the last two years.


I think it is possible that this is a ‘done deal’, but we are not sure, and it does not mean that it is either the right decision or that we should accept it as the right decision for the overall development of Social Enterprise.


What has been striking about the responses that we have had from around the place is that, by and large, the approach taken by the Social Enterprise organisations has been on the basis of what is best for the whole sector, and not just looking at the proposal from their own narrow interests, even if in fact their members are technically ‘small businesses’.


I hope that this is how we will all approach any review of the decision should it take place.



Pauline Green (Chief Executive & General Secretary, Co-operatives UK Limited):


The news that the DTI intends to merge the Social Enterprise Unit with the Small Business Service raises some major issues. We value the work of the Small Business Service, in particular its Social Inclusion Unit, very highly. However, as other commentators have pointed out, social enterprises come in all shapes and sizes. Many, including larger co-operatives and employee-owned businesses, employ far more than 250 people and have a turnover far greater than £11.2m, which is the official threshold for small business. Co-operative businesses turn over some £18m a year. It is clear, therefore, that the SBS cannot possibly have sole responsibility for social enterprise within government. Nor is social enterprise focused exclusively on social inclusion, which is how the DTI statement presents it. There are social enterprises in nearly every trade sector and for many people social enterprise is about a different way of doing business  – with participative democracy in the case of co-operatives. Social enterprises have a contribution to make in reforming public services, encouraging democratic participation and promoting  competitiveness. Any moves to change the way government supports social enterprise must take this into account.



Barbra Wallace (CEO, Stepney Works):


I would like to add my voice to those in the social enterprise community who are expressing concern over the decision to subsume the Social Enterprise Unit into the Small Business Service at the DTI.  I’m disappointed, although not surprised!


As Stephen Simms points out, the mission and culture of the SBS is not compatible with social enterprise.  This move exacerbates my concerns that social enterprise appears to be regarded by the DTI as merely a sub-set of business – rather than as a separate enterprise model, to be

differentiated from both the traditional voluntary sector and mainstream business approaches.  As Andrea Westall remarks, the DTI needs to acknowledge  alternative ways of doing business.



Allison Ogden-Newton (Director, Social Enterprise London):


Dear Barbara


Thank you for your email.  I have been following the subsequent reactions with interest and felt that it might be helpful to add Social Enterprise London’s perspective on the proposed merger.


I think none of those reading this email are surprised by changes in public administration, they define the nature of the beast.  In addition to that you have, throughout the period of time that I have worked with you, been careful to be clear that the life of the Unit as it is now would be finite. When Government considers models to solve private and public sector problems they at least look at possible social enterprise solutions.  This is due not least, to the work of the Unit and the impressive list of partners that you have marshalled. However we knew change was coming, it is the nature of the proposed change that is of concern.


If this move goes ahead, who can some of London’s most notable social enterprises such as ECT and Greenwich Leisure identify as their champions within Government. At SEL we consider it our job to promote the social enterprise model in its widest sense, and create more companies like these who offer value for money in the delivery of public services with the added value of community involvement and social return.


Although you noted the social enterprise contribution to entrepreneurial culture, its use, as you know, is so much broader than that. Under the new proposals where would the following work now live?


1.            Procurement- social enterprises can and should provide a competitive option for public service delivery.


2. Voluntary sector- social enterprise has a role to play in empowering the voluntary sector to gain more financial stability, independence and sustainability while taking some of their service delivery to a bigger client base.


3. Asset based development- social enterprise is an acknowledged regeneration strategy and often provides the critical component to transforming dilapidated properties into multi purpose community facilities, and ones which become profit making powerhouses


4. Taking social enterprise to the another level by bringing in large corporates as partners in resolving the relationship between corporate social responsibilities and social enterprise – social enterprise is acknowledge to have a valuable role to play in helping multinational corporations fulfil local community needs.


In the London region, local government houses social enterprise expertise in regeneration, community and economic development, procurement and enterprise- should not the Central government agency that coordinates this, and all of our work, reflect that?


My hope is that this is not a change in the wind. SEL is committed to ensuring the continued growth of London’s social enterprise community and anything than we can do or say that might allow us the opportunity to effect this process and lead to what we hope will be a positive outcome, we welcome.


As you have so ably demonstrated at the Unit, so much can be achieved with judicious encouragement. Can anything be said to reassure us that this move will be a good one and that everything you achieved will be built on and not just in part? I don’t believe social enterprise is a curate’s egg.


In any event, all the best, I hope you are experiencing some of the responses to your departure as the complements they are and not as unwelcome pressure. We all wish you well.



Barbara Philips (Outgoing director, DTI’s Social Enterprise Unit):


I’ve been out of the office (Chairing a Civil Service Selection Board for the fast stream) for three days, but, now I’m back, I see the emails reacting to mine of 7 January are still circulating.  Can I just say something? 


Let me start by how much I appreciate the passion and good intentions behind the emails.  The strong commitment to social enterprise you all have is one of the things I think highly of and know has been a crucial part of what has been achieved so far.  And it has been something of a surprise – though a lovely one – to see how much credit you give to me for our success to date.

Thank you.  I am proud of what I have done, but it wasn’t just me and, with the strategy in place (and shown to be working) and a good team now in post, my personal contribution matters much less than it did in the early days.


So now let me knock on the head a few myths and pieces of misinformation before they grow into social enterprise’s very own ‘grassy knoll’:


That the move to SBS represents a downgrading/will change what the Social Enterprise Unit does. –


No!  Why should it?  You have the Secretary of State’s personal assurance that that is not the reason for the move. Would I be happy to see what I have worked so hard to bring about drain away to nothing before we had completed the three year strategy? I will be replaced – and there are plenty of SCS just as good if not better than me – and we already have a really strong team of people in the Unit.


And we have a clear Government  strategy, which we will continue to implement.  And we have established our ways of working that are effective, so we will continue with them. And we continue to have personal support from Ministers and from Mark Gibson, Director General of DTI’s Business Group, which includes both the SBS and, where we are now, Regions.


Did any of you even know that we were in the Regional Directorate (REG) within Business Group?  Ask me why and I couldn’t give you a real rationale.


The truth is that, initially, Mark Gibson put us there because a unit has to be somewhere and with the DTI review underway, it didn’t really matter that much where, as long as he could be confident I’d be left just to get on with things. I was and I did.  But we have never ‘fitted’ with Regions – though, by chance, sitting next to the RDA bit of Regions has been useful.


After the DTI review, and the introduction of objectives that determine everything we do, we found ourselves delivering under an objective that SBS (also a part of DTI) was responsible for, yet physically located in Regions, who had an entirely different objective. We receive our admin. money (for staff and their costs) from REG, but our programme (for what we buy on contract, conferences, publications etc) from SBS.  Although it did not really make sense, because we needed to focus all our energies on implementing the strategy, and the time was not right then to sort that out, we made it work.  Besides, the SBS was itself under review and until it had published its strategy and business plan, it wasn’t certain how it would develop.  Now that A government action plan for small business has been published – with its inclusive definition of small business in 1.2 – and the SBS’s review of its senior management structure and organisation is in its final stages, the time is right to bring structure in line with what is virtually the case in practice anyway.


Being part of Regions never stopped us being THE Social Enterprise Unit. Being part of SBS won’t either.  But instead of being located in a Directorate where we are the odd one out, we will be in one where our colleagues have goals in common with us. The fact that we also have a wider vision will continue – just as it did in REG – but we will be operating in a more supportive environment because we will have more in common. We didn’t have to confine ourselves to being ‘regional’ just because we were in REG; we won’t confine ourselves to ‘small’ just because we are in SBS.  We already work closely with them – for example, our public procurement work built on valuable work SBS had already done and still does for small business procurement and they are responsible for the Business Links Operators, who offer business advice and support to social enterprises.


In addition, we have common values and aspirations for increasing involvement in enterprise in disadvantaged areas and by women, black and ethnic minorities, people with disabilities and young people.  That is part of our shared social inclusion agenda but, in addition, we have a wider remit.


We see social enterprise as being a business model of benefit whatever the social and economic state of that area, and we include environmental as well as social objectives.  We will continue to promote that wider view, just as we will continue to encourage high growth, national, social enterprises as well as small scale local ones. What we are committed to doing is set out in the strategy – and that is what we continue to be mandated by Government to deliver.


I know Nigel Griffiths has written to SEC Board members and I, with colleagues from DTI and SBS will be meeting some of them on Monday, and that there will be an Implementation Group with the Minister on Tuesday, but I wanted to speak directly to all of you who have been reading the flurry of emails, so you have a few facts to think about.