Campbell McDonald, Baxi Partnership
Picking up on the question about where do you get capital from, I've just joined from a Reform event this morning where they'd just wrapped up a session on social investment. Michele Giddens, executive director at Bridges Ventures was an inspirational speaker. She cast a vision of a nascent social finance sector that would only continue to grow over the next 10 years, and described a burgeoning group of organisations out there who are helping to put budding social entrepreneurs — or for the purposes of this conversation, motivated public sector employees with an enthusiasm to spin out — in touch with the funding they need — not least Bridges themselves.
I should probably declare a vested interested before my next statement — but my own organisation Baxi Partnership not only offers it's own fund dedicated to promoting strong, employee-led enterprises, but can also advise on how to leverage investment capital from a broader set of sources.
Carole Leslie is absolutely right though — your funding solution will need to be designed around your specific requirements, and you're going to need to have a revenue model of some description that demonstrates that however benign the terms of the investment, there is some chance of people seeing a repayment at a future date.
There are alternative non-state pots of cash, these are usually found in charitable foundations of one kind or another, though these tend to be less likely to be able to support you to design a bespoke arrangement.
I genuinely believe that thoughtful collaborations are the likely direction that public service commissioning will develop over the upcoming years. There appears to be a growing willingness to acknowledge in central government (if not yet in local government) that no one provider is likely to be able to tick all your boxes on any given commission. Marry that to the Government's attempts not only to break up public sector monopolies, but also senile markets where there currently exist (ie currently dominated by a handful of very large providers), then the future of strategic commissioning must surely be an onus on providers of all kinds and sizes to form intelligent and innovative partnerships.
The simple answer is that if you're struggling to get off the ground because of lack of backing, a partnership approach may be the answer.
The attraction of mutuals is not simplicity. One the of things about the mutual approach — that ironically makes the Treasury nervous, but should actually be sung as one of its great attractions — is precisely that it isn't as simple as going down to Companies House and registering a plc.
Ideally what your strategic options appraisal process should lead you to is an understanding of your ultimate goals, one that is aligned with all your stakeholders, and from that process should fall out some preferential approaches — ie we don't want to simply cut staff in-house, we don't want to go down a wholesale outsourcing route, we are attracted by spinning out into some kind of a mutual model. Again, your appraisal process will tell you whether you might be better suited to an employee-led or worker co-operative type model, perhaps you'd want something that is a hybrid allowing you to involve service users in your governance set up. You could be any of those and still be a social enterprise depending on where you're committing to reinvest your surpluses.
Allison Ogden-Newton, Social Enterprise London
What are the biggest challenges? Where to start? Peter Marsh, the recently appointed Chair of the Government's Mutuals Taskforce, asked me this yesterday. My answer was, information, people don't have enough and they don't know where to go to get it. I chaired a really frustrated room of public sector workers yesterday who were interested in #socent but confused about where to go for the real info. Secondly money, people need capital to start any business and the public sector is not exception.
We are talking to banks like RBS who are really trying to lend to social enterprises and I was chuffed that the Big Venture Challenge which although it is a competition, is going to look for 25 social enteprise ventures to invest up to £175,000 in each. Details of that are on the Unltd website. Lastly we need a market and that is all about procurement. That is the really tough one and something we need to address as a matter of urgency.
Mark Sesnan, GLL
Things have changed a lot since GLL was formed in 1993, but in many ways they are also the same. A key difference then was that GLL was set up in a hostile (Tory) Compulsary Competitive Tendering (CCT) environment whereas now, we have new found (Tory) 'friends' in government pushing people out the door into mutuals
Things that are the same include:
• TUPE — but that is not really a bad thing for staff overall, even if it has irritating bits for the new business.
• The climate of nasty spending cuts — which does of course lead to 'spin out' opportunities. GLL would not have been born without the cuts of 1992.
• The need for innovation in public service delivery. I still think many public bodies have not changed much in the last 20 years.
• The need for any 'spin out' to be a genuine, profitable, business.
Carole Leslie, the Employee Ownership Association
The major issues tend to be around pensions and also how commissioning will work. I heard from two organisations who are currently spinning out that the setting up of new pension arrangements is consuming an inordinate amount of time. In both cases, existing staff were retaining their NHS pension, but new arrangements had to be made for new joiners. This is a distraction that hadn't been anticipated.
Similarly, there are concerns over the "any willing provider" policy, No one is saying business or revenue has to be guaranteed, but there are concerns about the procurement processes, and the criteria that back the decisions. There are also some organisations keen to spin out, but find their efforts thwarted because "those at the top" are not supportive.
Dom Potter, Social Enterprise London
You need a plan. In terms of the Sports Centre and similar attempts to spin out, I think that like in any form of running an organisation, there needs to be a solid business plan built upon robust market research, and a strong team in place to execute this plan.
From that starting point, there are then a range of social investment organisations who could help with funding — such as UnLtd, The Big Issue Invest, The Social Investment Business etc — which might be applicable. Alternatively, you could seek transitional funding from the local authority to establish your business if the plan and founding team are strong enough.
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