Social enterprise

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Social enterprises in health are a largely new and unknown phenomenon but the Government (and others) are promoting them heavily as an alternative to traditional public service organisations. On this page we examine the concept of social enterprise, explore why social enterprise organisations are being proposed as a way forward in delivering health services and set out what the CSP is doing in relation to the social enterprise initiative and the wider alternative NHS providers agenda. A number of links to other resources on social enterprise appear at the foot of this page.

What are social enterprises?

Social enterprises are businesses that trade with a social and/or an environmental purpose or, put another way, they are organisations that apply business approaches to achieving 'public benefit'. Forming part of what is termed the 'Third Sector' (a third way between private and state provision), social enterprises are extremely diverse and encompass a range of type of organisations from co-operatives and other mutuals to development trusts, community enterprises, housing associations, football supporters' trusts, credit unions and leisure trusts, amongst others.

Government estimates suggest that there are more than 55,000 social enterprises in the UK, with a combined turnover of £27 billion, contributing almost one per cent of GDP (gross domestic product). The sheer diversity of social enterprises means that there is no common organisational model, so one social enterprise can be very different from another in terms of its legal structure and governance arrangements. Some high profile examples of social enterprises include:

Social enterprises in health

The Labour Government's modernisation of public services involves a radical vision for the NHS, transforming it from what former health secretary, Alan Milburn, described as "a monolithic, centrally-run, monopoly provider of services" to a health system "where different health care providers - in the public, private and voluntary sectors - provide comprehensive services to NHS patients within a common ethos".

For the Government, 'who' provides the service is less important than the service that is provided, and social enterprise organisations form a major part of the Government's drive to increase the range and diversity - or 'plurality' - of providers of NHS services. A plurality of providers, operating in a competitive health market, is seen as key to transforming the way services are delivered to patients, with the emphasis being on proactive services, tailored to the needs of the individual, that promote health and well-being and which support the Government's objectives of improving quality of care; increasing the capacity of the NHS; supporting patient choice; maximising value for money and promoting greater equality.

The main arguments put forward in favour of expanding the role of social enterprises in health are that they bring a level of entrepreneurship, innovation, creativity, responsiveness and understanding of their clients' needs that is lacking from traditional NHS services.

Examples of social enterprise in the health and social care sector range from:
  • the City and Hackney East London Integrated Care Society - a small operation to support and co-ordinate the practice-based commissioning activities of a group of GP practices, (see website: www.networks.nhs.uk) to
  • the nationwide organisation Turning Point (see the website link www.turning-point.co.uk) with a £600 million turnover, 1,800 employees and more than 200 contracts with PCTs and local authorities.

The CSP's experience to date of social enterprise companies has been limited. Central Surrey Health (see their website: www.centralsurreyhealth.nhs.uk) has been the trailblazer of the new social enterprises in health, being the first example of a large scale transfer of key NHS services to an employee-owned organisation. Set up on 1 October 2006 when 650 therapy and nursing staff at East Elmbridge and Mid Surrey PCT (now part of Surrey PCT) transferred from the trust to the new company, Central Surrey Health is now responsible for delivering £20 million of contracts to the NHS.

Crucially, the company was given strong backing by the Department of Health and benefited from the involvement and support of the then Secretary of State for Health, Patricia Hewitt, not least in resolving the complex issue of allowing the transferred staff to retain their NHS pension (an issue seen as critical to the successful launch of the company). However, despite the backing from the Secretary of State and the DH, the establishment of CSH caused great concern, particularly because it was considered that the transfer of staff to the new company was rushed through without the staff themselves or their unions, including the CSP, being properly consulted, and because of fears over the long-term viability of the new company.

Indeed, even proponents of social enterprise organisations who are keen to point out that social enterprises tend to emphasise the importance of investment in training and development of staff in order to ensure that services are of a high standard, acknowledge the risks associated with their set up. For example, the Social Enterprise Coalition's (see their website: www.socialenterprise.org.uk) Healthy Business: a guide to social enterprise in health and social care warns:
"The newer social enterprises, such as Central Surrey Health and Principia, face the challenge of consolidating their core business over the short term while exploring ways to diversify their income and spread their risk as the organisation establishes itself."
Social enterprises of the nature of Central Surrey Health, then, are widely acknowledged as new, untested and which certainly face risks. Other issues pertinent to social enterprises in health include:
  • Resolving the challenge of pensions - Principia Partners in Health (formerly Rushcliffe GPs) has been unable to secure access to the NHS Pension Scheme because of the company's legal structure;
  • The process of transferring staff from the NHS and the continuation of pay and terms and conditions as covered by the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) (see TUPE briefing and Powerpoint presentation), including the continued honouring of Agenda for Change and the Knowledge and Skills Framework;
  • The employment situation of new employees;
  • Continuity of service in any subsequent NHS employment;
  • Trade union recognition and collective bargaining;
  • What happens to staff in the event of commercial failure of the social enterprise company or acquisition by another commercial body which may not be UK-based?

Despite these and other concerns, social enterprises are high on the Government's agenda and are being enthusiastically and energetically promoted as a new way of organising the delivery of health services that really meet the needs of the communities they serve.

In January 2007 the Department of Health announced 26 successful bids under its social enterprise 'Pathfinder' programme (see Department of Health's website www.dh.gov.uk) - (approximately 20% of expressions of interest in the Pathfinder programme came from existing NHS providers: the bulk are 'new' organisations). Start up costs for the projects, some £1.4 million, has been funded by the Department of Health and the DH has also established a Social Enterprise Investment Fund (see Department of Health's website www.dh.gov.uk) of at least £73 million to be distributed over four years. Both the Pathfinders and other social enterprise organisations delivering health and social care services can apply to the fund. It is intended that the learning from the Pathfinders will be shared across health and social care, so that others can benefit from their experience.

This text on this page was last updated on 17 Aug 2007.