Recently Ethos Paper invited me to take part in their first public debate here in Liverpool on the question of whether we’re in danger of over-regulating social enterprise?
The brief from my friend Fiona Shaw of Ethos Paper being:
“Why bother with “Social Enterprise”? Why not just be social and enterprising?
We want the debate to be generally about the regulation of ’social enterprises’ and purism, and if you can be a social enterprise without specifically being set up as a CIC, and – if you are – whether it hampers the way you operate, in fact?!
I thought you might be interested in presenting the case against too much regulation?”
She knows me well!
So I had a walk around and a think, wrote some notes and people gathered one evening at the Baltic Social on Parliament Street for the debate. Matt Donnelly of Health Equalities Group spoke in favour of regulation and me against the motion. 
It was a good friendly debate where we both had the grace to agree with each other at least some of the time and I’d guess Ethos Paper will also be publishing Matt’s arguments, along with mine. As I’m happy to have done on here. But for now, from both my notes and memories, here’s roughly what I said.
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“We need to be very careful about the over regulation of social enterprise, in my opinion, because there is no social without enterprise. I’ve seen far too many social enterprises fail, even though they were doing great social and even environmental things, because they were no good at enterprise. Couldn’t find enough customers who would pay them and so failed to notice they were running out of cash while focussing relentlessly on the good things they were for. Far too often that dread phrase ‘not for profit’ is a self-fulfilling prophecy. Far too many, in fact see ‘profit’ as a dirty word to be avoided altogether or euphemised into vague talk of ‘surpluses’ that may be made some day.
Therefore we see many social enterprises under pricing, over promising and under performing. And the ones who don’t go under quickly go running into the forest of grants and regulations where they nearly always lose their way. Bent out of shape by the requirements they find there and the tame ‘advisors’ the regulators control them with. All of these people who couldn’t run a social enterprise to save their lives drip feeding them grants whilst tick boxing the out turns that never quite measure up to the targets they’ve set for the unwary. Who’d innocently thought they were doing all this to do some kind of good.
‘Why don’t you become a Community Interest Company so you can get grants and charge me less?’ someone really did say to me a while back. (Imagine doing that in a shop?) The kind of customer I wasn’t even vaguely interested in having got an immediate no. I may be social but it’s being an enterprise too that’s made my living these past 20 years.
Not that I’ve operated beyond regulations. Annual returns, audited accounts, Companies House, Inland Revenue, tax and VAT inspections all more or less happily complied and coped with. Operating variously as sole trader, partnership then limited company who simply and always chose to be social. Never feeling the need or desire to go into that forest of regulators where charities, CICs, mutuals, RSLs and their regulators, co-ops and friendly societies wait to approve and monitor me so I can go looking for the grants I never have gone looking for.
And ok, I know it’s in some ways easy for me to talk as I’ve never wanted to ‘go to scale’ or do the kinds of work that needed funding beyond what I’ve been able to raise by being paid.
Still though, I see far too many start ups assume that being a proper social enterprise entails following the grants and regulatory paths so many have trod before them. Paths that too easily and often drain the energy and passions out of a social movement, turning it into the obedience of a sector.
Sectors are where movements go to die. I’ve seen it happen before and would hate it to happen to social enterprise.
As you may know if you’ve read very much of my blog I grew up with Shelter and the early housing associations. First as a volunteer and then in ten years of paid work in the 1970s and 80s that never for a moment felt like work at all. Those of us from Liverpool would meet up with those of us from Manchester and London and everywhere else in what felt like, and was, a real social movement for good. Except that while we were out there doing good the regulations and the regulators sneaked in behind us and, I would say, tamed our movement into a sector. Full of advisors and careers and junior ministers in junior departments. And they called the sector social housing, where a good number of the organisations involved could currently be said to be turning their backs on their founding values and demanding the ‘freedom’ not to do social housing at all any more. But that’s another story and one I certainly don’t want to see repeated with social enterprise.
Anyway, ‘sectors’ don’t matter to the public, to our customers. Only to other members of the sector. Most customers, in my experience, are at best only mildly interested in the fact that we’re social enterprises at all. All that stuff, in short, is a distraction. From enterprise, creativity and joy.
Yes joy. There I’ve said it.
It’s important that we are ethical and social and can show that in ways that move us well beyond the tired old anecdotes many of us tend to tell. But it’s mainly important for ourselves. Because these are our lives we’re leading here and it matters what we do with them. It matters that we enjoy ourselves.
For me, I’ve spent twenty years now being my own kind of social enterprise. Doing what interests me the most out of all the things that could be done. Doing what I love because I know that’s what I’ll be best at. Getting paid where I can, and doing it anyway where it’s needed. In my judgment. No regulators ordering me around. No grant givers telling me what to do.
In never having had any grants I can’t be said to have any unfair advantage over any other enterprise and consider myself to be part of a movement to be social and ethical as well as enterprising. Twenty years ago as social enterprises got going we had big dreams that this would be big news and that soon all enterprises would recognise that being good for the people and the places where you work makes obvious sense and would become a better and more obvious way of doing business for everyone. Many of us, in fact, saw ‘social enterprise’ itself as a temporary vehicle that would soon change everything, encouraging all business to be more ethical and responsible.
The fact that it hasn’t, yet, doesn’t mean that it isn’t still a good idea. But if we let the idea get wrapped up and bogged down in so many regulations that it can be boxed off into a sector, then the idea will have died. There is no social without enterprise, remember, so be careful out there with those regulations.”
Read Matt Donnelly’s opposite side of thedebate here.
There will be more Ethos Debates, I’ll let you know when. Or they will if you put yourself on their mailing list?
Well said. No reason at all why enterprise can’t be social and I’m in favour of initiatives which stay close to people, which listen to what people want, rather than managing them.
I suspect a big part of the problem is the initial success of certain social enterprises attracting the attention of government (local or national), who nowadays seem eager to offload duties and responsibilities because they cost money. So they get someone else to do the job they’re responsible for and do it for less money. Of course, like the Government Agency drive of the 1990s, the idea is to make these functions “independent” but still allow politicians to take credit for the good things they do but avoid the flak when it all goes wrong. The social enterprises like it, too, because it confers official recognition and free money (if you can cope with the paperwork). And perhaps more money than they’ve seen up until then (even if the enterprises don’t realise that even a large sum of money is finite and soon disappears when you start spending it in the real world).
But taking the Man’s coin has its downside; because it is taxpayers’/ratepayers’ money, there is a burden of regulation to be carried, in the name of Transparency, and Good Governance, and Accountability. And so the hoops that you have to jump through just keep on coming.
So well done to you for making the trick work. And as for understanding the mechanics of money when it comes to your own living, don’t be too ashamed about that. I found that it took twenty years of working in utility regulation to make me a) understand business, and b) become a better (small ‘s’) socialist. (Paradoxically. In fact, I sometimes find myself understanding business better than some people who claim to be entrepreneurs or business people. Perhaps it’s the level of political detachment from capitalism makes me able to stand back and say ‘Even I can see that’s a bad idea…”)
Thank you Robert for the wisdom of your own experiences. Like you, I am not even slightly ashamed. And it hasn’t been a trick. Just an honest exchange, the simplicity of enterprise.