NEC Debates - Social Enterprise: moving from a safe to a radical agenda   Log inThe arguments that matter   Home Courses Resources Work-based Learning Debates About NEC Community   Home > Debates > Social economy > Social Enterprise: moving from a safe to a radical agenda   Debates Travellersł Education and Distance and Independent Learning Talk given by Alison West, Chief Executive, National Extension College in Cambridge on June 18th 2004.     A Levels - the next 50 years Gillian Moore, Director of Study Programmes, NEC, talks on the future of A levels in the light of Tomlinson's interim review of 14-19 education in England.     Social Enterprise: moving from a safe to a radical agenda Talk given by Alison West, Chief Executive, National Extension College to the Masters in Social Enterprise Seminar, the University of East London, Docklands Campus, London, 25th March 2004       To download a copy of this talk, please click here. There is a great deal of interest at present in aspects of the social economy. Local and central government supports the creation of community businesses, the Development Trust movement is expanding, loan finance and legal structures are being provided and the educational system is responding to this level of activity by setting up various courses in social enterprise. The social economy sector looks as if it will grow. However, in the UK at present there is the conspicuous lack of an integrated and multi-level approach to alternative economic systems. The large mutuals continue to vanish, the Co-operative movement is struggling to re-invent itself and, although there is plenty of public funding for small scale projects in community and social enterprise, no-one is really talking about creating a different economic system, one that would link production to consumption, that would create a money market of its own, and one that would give strength by linking large players to the plethora of small traders that are being encouraged. In the 1970s, the co-operative development movement of that time at least had the luxury of operating within a trade union and labour movement that retained a commitment to supporting mutual ideals. Today, we are rudderless in the political vacuum that has followed the decline of the trade unions and of traditional labour. We also, fatally, have a current social economy movement that lacks a sense of history. To make sense of what is happening in the UK in the early 2000s, we need to compare the current type of activity with the systems of the late 19th /early 20th century on the one hand, and on the other the attempts under previous Labour administrations in the 1970s to foster a modernisation of the mutual tradition. The industrialisation of the UK, peaking in the 19th century, created groups of workers visibly being exploited and being refused a reasonable share in the profits of their own labour. In addition to low wages and poor security, food was often controlled, with adulterated milk and bread a feature of working class life. As a response to poor conditions, we see the growth of self-help organisations, the realisation of the power of combination. Although resisted by owners, slowly the realisation of strength through numbers became institutionalised in a variety of mutual systems, including financial organisations such as the building societies. Food quality came under control through the development of the co-operative movement, which in its heyday improved the health and well-being of millions of workers. Trade unions, working menłs clubs , reading associations, welfare systems, all of these made everyday life better. Crucially, the co-operative movement dealt with the three key areas of production, retail and finance. Essentially a regional and national system, this UK perspective limited the movement (despite good international links for the expression of solidarity) when globalisation really hit. Although a much-needed amelioration of working class conditions did take place, the dominant ownership system of capitalism remained healthy and untouched by this co-operative activity. Indeed, it produced healthier workers without input from owners and could be seen as having been in their interests. This mutual system, well organised and strong, lasted a surprisingly long time before decaying after the second world war. As wages rose, growing working class affluence reduced the absolute need for a self-help system. Disposable income meant choice and poor management and lack of change in the large institutions, particularly the retail side of the co-operative movement, made their offerings seem out-of-date and not in line with the aspirations of the class it was set up to serve. The establishment of the health service and the welfare state also reduced the need for the mutual movement. In effect it lost its captive market and could not rapidly re-gear to compete for it. Throughout the long Conservative post-war hegemony, there was certainly no central government will to save the mutual movement and at this stage local government had not developed a pro-active economic development function. The return to power in the 1970s of Labour administrations saw support for mutual approaches grow. The Labour governments of the time realised the consequences for the labour movement of the loss of a sophisticated multi-layer support system and expressed, from a central government perspective, a commitment to promoting co-ownership of various forms. The Mondragon co-operatives of Spain were used as a model. At first, it seemed as if a new Golden Age would emerge for co-operatives. The Co-operative Development Agency, with an equivalent in Scotland, was established and ICOM and ICOF were supported. Small service, producer and retail co-operatives were established, clustered in areas such as printing, wholefood and alternative design. Housing co-operatives also began to appear. Two quite different sorts of co-operatives were fostered. First of all, there was this plethora of scattered small-scale co-operatives, with ownership and management combined in collective formats. These tiny ventures survived mainly through a 70-80% inter-trading system and a strong degree of patronage from the labour, trade union and left wing local government systems. By this time, local government was moving into business and industrial support and the GLC had an innovative approach to the local economy. As a major source of contract work, the GLC was able to route work to social enterprise and it also set up development and support systems, including access to loan finance. Many economic development units in local government established co-operative specialist sections. The other level of business that attracted central government support, primarily from Tony Benn at the Department of Industry, were large-scale industrial sectors facing stiff international competition, including the British motor cycle manufacturing capacity. The high profile eventual failure of Meridian and Upper Clyde Shipbuilders showed the pointlessness of trying to shore up industries that could no longer survive increasing globalisation and associating co-operative systems with industrial failure did the co-operative movement no good at all. Although there was a strong commitment to the principles of co-operation in the 1970s administration, no national strategy was developed. Central government struggled to work out how best to support mutuality but, despite the growth in the trade union movement of combine committees to deal with transnational companies, took a surprisingly sub-national view of things. Defending existing UK sectors was not a positive strategy and the large old mutuals, the building societies and the Co-operative Wholesale and Retail societies, were largely left to fend for themselves as they were increasingly overtaken by what turned out to be transnational forces. The small scale co-operatives were lacking in business skills, confused management and ownership, wasted inordinate time in decision making, were over reliant on a closed circle of trading and failed to penetrate mainstream markets. Even if central government had set up a strategic approach, it would have been fighting an uphill battle in supporting marginalised small- scale operations and failing industries. Predictably, the return to power of the Conservatives at the end of the 1970s and their retention of power well into the 1990s meant an end to the embryonic re-emergence of the mutual sector in the 1970s. The Conservatives presided over an unfair onslaught on the large remaining mutuals, forced to compete through restrictive legislation on an uneven playing field with aggressive banks. The small co-operative movement disappeared as the trade unions and the traditional labour movement came under attack from central government. Contract compliance rules from Europe ended favourable terms for work from local government. Legislative liberalism led to a loss of national ownership of many institutions, particularly in the financial services, and high inflation and interest rates made new starts very difficult. The housing co-operatives were taken over by highly-paid executives who operated them as traditional housing developers. Wealth gaps increased and the traditional working class support structures were slowly dismantled. Some local authorities, themselves under attack from a hostile central government, struggled to maintain support for social enterprise. The re-election of a Labour government in 1997 led some in the mutual movement to hope. In their first term of office, however, new Labour showed astonishingly little interest in the mutual system, possibly due to their fear of being perceived as old Labour. Their preoccupation at this time was with spatial inequality, as they resurrected the Strathclyde Regionłs 1970s strategy of targeting resources at 'areas of multiple deprivation'. An admirable desire to raise disadvantaged areas to the level of ęthe averageł was characterised by little awareness of how to achieve this. Areas with over 80% of the population unable to work (old age, youth, disability, mental health issues, caring responsibilities) were expected to become self-sufficient, to end the dependency culture, to train themselves for work and as an added option, to set up and run successful community businesses. These individual disadvantaged areas were not federated, no systems for inter-trading were set up and it was never clear how the low economic base of a very poor area could in itself support any social enterprise for long without ongoing public subsidy. So lots of points of light, but no system. As the years went on, pressure was put on the Labour government to make loan finance easier for social enterprise and to set up legislative frameworks that would remove some of the technical obstacle to third sector trading. Work has taken place on this and the Phoenix Fund did develop loan finance organisations to support the sector. Unfortunately, again a scattered and non-systematic approach dominated and in early rounds the Fund actually refused to fund infrastructure bids. Now, there is a high level of rhetoric from government, a lot of exhortation directed at the poor, telling the disadvantaged to come off welfare and community groups to reduce their grant dependency. Everyone is expected to work or trade, regardless of how unrealistic this is, or how far people are from possessing business skills. This is a 21st century version of 19th century self help and possesses many of the contradictions and limitations of philanthropic lecturing of 150 years ago. There is no commitment at central government level, which is where it would have to be, to establish in the UK a sophisticated multi-level mutual system, one with the comprehensiveness of the old co-operative movement but strengthened enough to survive the inevitable attack upon it of the global corporates. The establishment of a strong not-for-profit system covering finance, production and retail can survive beneath the radar for a certain period of time. The transnationals can afford to ignore it until it grows to the stage when their own profits are threatened. Only governments have any chance at all of preventing the destruction of the mutual system for the second time. As the supermarkets become aware that their domestic market is saturated, they are already turning their attention to corner stores, the last refuge of the retail Co-operative system. Their buying power enables them to undercut mutuals unless mutuals can grow to a high enough share of the market: who will protect them until that happens? We end, therefore, rerunning the painful lessons of the 19th century. Only through numbers do we have any strength. Only through solidarity do we have any power. Unless new coalitions are built, individual parts of a mutual system will be picked off one by one. We need to learn from history: lots of small co-operatives, community businesses, social enterprises, neighbourhood initiatives will not be enough, even with the support of the Development Trusts. We need to plan to rebuild the three key arms of co-operation: a good finance system, the production of goods and services, and an efficient retail network. Without political backing, the task will be almost impossible in a global economic system that is itself not based on a mutual model. We need the government to set some targets: What percentage of the UK GDP should come from mutually controlled business What percentage of UK wealth should be mutually controlled What percentage of the UK workforce should be employed in mutuals The current government has no national strategy for the social economy and is not likely to develop one unless the current fashion for social enterprise allows the emergence of a strong enough coalition to exert political pressure. The onus now is on the social enterprise movement, covering everything from the large mutuals to the smallest of neighbourhood community businesses, to federate itself and to start to have some difficult discussions about its own long-term strategy. 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