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    28 November, 2007

    Social Enterprise

    One of my responsibilities as a Minister includes the Assembly's policy for social enterprise.

    I set out some thoughts on this in a speech on social enterprise day. For the full text:

    Leighton Andrews AM

    Deputy Minister for Regeneration

    Social Enterprise Day 15 November 2007

    Today is Social Enterprise Day, a day specifically set aside within the overall celebration of the UK’s Enterprise week to raise awareness of and celebrate the best our communities have to offer in terms of sustainable regeneration through economic activity.

    This is the fourth Enterprise week that we have held in Wales. It gives us an opportunity to showcase social enterprise and draw attention to the diverse range of activities that are undertaken throughout Wales. Strengthening our enterprise culture is a key element in regenerating our communities, and today we salute the work of social entrepreneurs all over Wales. There is no shortage of energy or of creativity in social enterprise in Wales.

    When Rhodri Morgan appointed me as Deputy Minister for Regeneration in the summer, it was the first time that a Welsh Assembly Minister has had overall responsibility for both economic and social regeneration of our communities. I want to ensure that we maximise this opportunity by promoting the enterprise model that links both economic and social purpose, which is known as social enterprise.

    The Welsh Assembly Government set out its commitment to the Social Enterprise Sector in the Social Enterprise Strategy for Wales, launched over two years ago. The Strategy drew together advice, policy direction, and recommendations not just from civil servants and support organisations, but also from social entrepreneurs.

    In the Social Enterprise Strategy, we defined social enterprises as businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders or owners.

    Earlier this week my colleague Dr Brian Gibbons presented our third sector strategy - The Third Dimension - to the Assembly.

    This document presents the Assembly Government’s strategy and programme of action that will underpin its support for, and working relationship with, the third sector – of which the social enterprise sector is a key component.

    Within The Third Dimension we have set out some initial thoughts on how we will be supporting and accelerating the growth of the social enterprise sector. This must contribute to the aim of empowering people and communities so that they can contribute more fully and effectively to the building of a better Wales.

    Social enterprises offer a huge range of services, operating in fields as diverse as childcare, arts centres, crime prevention, sustainable tourism, food production and food distribution, furniture recycling, the provision of housing, and health and social care – to name but a few.

    They also operate in many different forms, for example Co-operatives, Community Enterprises,
    Development Trusts, Community Interest Companies, Credit Unions, employee-owned businesses, the trading arms of Voluntary organisations, and Social Firms.

    But we should also include Housing Associations, and indeed the new registered social landlords being created following ballots by tenants in favour of stock transfer.

    What these models have in common though is that they all offer an alternative model of doing business which is driven by a powerful need to meet social or environmental objectives.

    The time is now right to look at what we have achieved and what we still need to do in order to drive this agenda forward. I have therefore asked my officials to develop a new focused Action Plan that will set our agenda for action for the three years from 2008.

    Let me take a moment to expand upon some of the different forms of social enterprise.

    Co-operatives for example have a very long history and continue to gain strength and recognition in Wales. Indeed, next year will be the 150th anniversary of the death of Robert Owen, the Welshman who was of course known as ‘the father of co-operation’.

    The Assembly supports the Wales Co-operative Centre to help us promote the sector. In this, its 25th year, the Wales Co-operative Centre is now the largest co-operative development agency in the UK. It has been instrumental in starting over 1,000 new co-ops and in creating and safeguarding over 3,000 jobs.

    I know that the Wales Co-op Centre is proud to have been of assistance to a group of cancer patients resident in the Rhymney Valley.

    Four determined cancer patients contacted the Centre for assistance in setting up a co-operative whose purpose was to improve the provision of equipment in the Upper Rhymney Valley. The group now has over £100,000 worth of equipment that it loans to cancer patients and disabled people to enable them to stay in their own homes. It also has a vehicle to drive people to hospital. The group has grown and now over 30 volunteers help to run a shop to raise funds for the group and an additional six volunteers act as drivers. There is now an employee, hopefully more soon, and all this activity has taken place without any grant assistance.

    The Co-op Centre has also helped us to grow the Credit Union movement in Wales, there are currently two community credit unions active here, Afan Savers and Neath Port Talbot credit union. Together they have 1300 members, employ 5 people – four of these part-time – and benefit from the skills of almost 40 volunteers. I have recently visited the Bridgend Lifesavers Credit Union at Sarn in Bridgend and last week the Clwyd Coast Credit Union in Rhyl. In our proposals on Financial Inclusion in schools recently we made it clear that we want to give credit union access through secondary schools.

    And let us not forget the work the Wales Co-op Centre has done in Wales to promote the understanding and establishment of more employee-owned businesses.

    It is interesting that in the two decades that the Wales Co-operative Centre has facilitated employee buyouts they have never seen a company fail.

    Failure is not a word associated with our host today. Gaynor Richards, Director of Neath and Port Talbot County Voluntary Service is also a successful social entrepreneur coming from the voluntary sector. Gaynor was at the forefront of setting up a children’s nursery, Tiddlywinks, in an area that did not have affordable childcare. The nursery at Ystalyfera has seen over 1,000 children through its doors in the eleven years since it was open. It now provides places for 36 children and provides employment for 22 members of staff. This is an extraordinary achievement.

    The Assembly Government supports the work of the Development Trust Association. Development Trusts are community owned and community accountable organisations that operate as social enterprises and trade in goods and services. Only recently I visited Caernarfon and was shown around the award winning, creative Arts Centre, Y Galeri.

    This £7.5 million project grew out of the need to regenerate a declining market and historical town centre. The Trust was formed when 50% of the town centre properties were empty, for sale or derelict. Funds were raised to buy some of these properties, to refurbish them and to make them attractive buildings that others became keen to rent for retail and social housing purposes. One by one a portfolio of over 20 properties has been accumulated.

    The rent from these properties fund, amongst other things a creative arts project which engages with “excluded” children, who are given opportunities through media such as animation and film making, to become included in their communities again, who are given an opportunity to show that they can be good at something and valued for their contribution. The project also provides first class free musical concerts to the most senior people in the community at a time and venue where they can access the facilities. The Trust also undertakes many other “socially motivated” projects in a stunning building that in itself has drawn additional development to the Town.

    Of course, the key to this project has been its accumulation of assets. As an Assembly Government, we are committed to strengthening the framework of financial and asset related support available to new and expanding social enterprises.

    We are fully supportive of the review of Community Assets commissioned by the Office of the Third Sector, and we are currently reviewing our response to the Quirk review into the barriers and incentives affecting the transfer of public assets to community management and ownership.

    We need to consider how we can make it easier for public assets to be transferred to communities and social enterprises. I have asked officials to do some initial work on this, and should be in a position to engage with the sector in the New Year. I also want officials to look at the implications of the Cabinet Office consultation on the risk capital investment fund for social enterprise which has recently concluded.

    Let me turn now to Housing Associations. I see housing associations as social enterprises. Indeed, they are arguably the part of the social enterprise sector with a clearly-defined professional structure.
    Those established under the Assembly’s Community Mutual model following ballots of local authority tenants themselves operate on a co-operative basis.

    Due to the size of the housing assets that they own and manage housing associations are well placed to assist with public engagement and community empowerment. They can also raise collateral to resource projects.

    A recent survey undertaken by Community Housing Cymru has highlighted that 14 Housing Associations across Wales are involved in Social Enterprise/ Business Development work. Projects include feasibility studies, setting up Social Enterprise Centres, setting up food co-ops, support and business planning advice for other community projects, access to learning and training, funding Community Nurseries, furniture recycling schemes, support for care and repair agencies and signposting for careers advice.

    The creation of workspace and employment, training for local residents, recycling and distribution of unwanted and second hand furniture projects have all contributed to the raising of confidence and aspiration of tenants and assistance into low cost home ownership.

    Our Strategy for the Third Sector committed itself to the expansion of social enterprise models. We identified opportunities for substantial growth in childcare, care for the elderly, waste management and recycling, energy efficiency and small scale generation, community transport, training and special needs employment, green and ethical trading.

    We also need to ensure that, where possible, our procurement policies allow social enterprises to compete effectively.

    We have stated that each Assembly Government Department will be required to identify opportunities for social enterprise solutions within its functional area, and we will encourage other parts of the public sector to do likewise. We will also continue to strengthen promotion of social enterprise understanding through the education system and through general awareness and training initiatives.

    We are committed to delivering a strong, thriving social enterprise sector in Wales. However we need to know more about its nature, dynamics and scale, its role in economic productivity, its contribution to the delivery of public services and its social and environmental benefits. More also needs to be known about its investment and financing needs.

    We will build this vital evidence base though a mapping exercise and by contributing to a UK-wide, long term study being conducted through the Economic and Social Research Council. Drawing on this evidence and the achievements of recent years, we will review and update our Strategy during the current government term.

    The business support needs of social enterprises
    will vary depending on their activities and will
    change as they pass through different stages of
    development. Fledgling social enterprises may
    require sympathetic support including a lot of hand
    holding, mentoring and encouragement.

    The further along the enterprise scale they
    progress, the more akin to mainstream SMEs their
    support needs become. We need to ensure
    that the Assembly Government’s new approach to
    business support – Flexible Business Solutions
    includes effective support for social enterprises. The
    Assembly Government is working with the Social
    Enterprise Network to better match the business
    support service to the third sector’s needs.

    We recognise the vital role that this sector has to play in the regeneration of our communities. We acknowledge that the sector has expertise and experience that we need to draw on. We know we have enterprises run by communities that are capable of winning contracts to deliver services - who better to understand the needs of the communities than the communities themselves?

    Finally, I believe that we must establish a clear connection between the social enterprise sector and the corporate social responsibility policies of mainstream businesses. Recently, for example, Rhondda Housing Association successfully bid, against over 100 other not-for-profit organisations, to be one of 3 organisations to benefit from 5 weeks free consultancy from 2 partners of Price Waterhouse Coopers. The application and selection process was very testing, and culminated in a full-day’s interview for the shortlisted organisations.

    PWC worked with RHA to assess the feasibility of creating a social enterprise. Their analytical research identified key characteristics of success for social enterprises:

    - it should be a business enterprise first
    - there should be a clear market need
    - there needed to be an entrepreneur running the project
    - it needed to provide a quality service and competitive pricing
    - the operation needed to be of a sufficient scale to have real leverage
    - it needed to be prepared to take risks

    PWC’s work has helped RHA design something that could work as a viable and sustainable social enterprise. The project has identified maintenance services within the Hendre group in which RHA sits, helping to bring tenants into work, supporting them with training and mentoring and finding long-term jobs, recycling surplus from the project within Hendre group activities, including community regeneration. They are now looking at taking this project forward.

    Before I end, I must thank the Leader of the Neath and Port Talbot Local Authority, Derek Vaughan, for supporting the sector here in Neath and Port Talbot.

    I know that you have supported Gaynor Richards and her colleagues in the establishment of a social enterprise network within the Borough which enables local social enterprises to learn from their peers and to work together to provide the products and services in a variety of sectors to their communities.

    I would like to see this type of network replicated throughout Wales each network learning and supporting each other leading to the establishment of a national representative body able to act as a unified voice for the sector.

    May I wish you a successful event.

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