Social enterprises could be the key to economic recovery
In an article today Chi Onwurah MP for Newcastle Central and shadow cabinet office minister says social enterprises could be the key to economic recovery.
Chi believes too often we only think of social enterprise in the context of delivering public services:
“ This is important but at this point in the economic cycle, we must also consider the role it can play in wealth creation.
Ms Onwurah gives examples of social enterprises playing an economic role in Lisbon and Newcastle before concluding:
“ European funding streams could be used by Lisbon and Blakelaw Ward Community Partnership and potentially by a future Labour government to support sustainable economic growth through social enterprise.
“ We should be using the recovery to support new vehicles for wealth creation – ones built with social equity.
Lessons from Portugal: Social enterprises and economic regeneration
Central Newcastle MP Chi Onwurah believes the UK can learn from Portugal’s experiences about how social enterprises can aid economic recovery
- Chi Onwurah
- Guardian Professional, Monday 5 August 2013 15.40 BST
If Labour win in 2015 we will inherit an economy which is at best bumping along unsteadily thanks to this government, a Whitehall crippled by staff cuts and an unremitting focus on fiscal prudence. We will come in with a mandate for change, the real change this government has reneged on, a more balanced national economy, stronger regional economies, greater social equity and more good jobs that empower people.
Usually debates about the role of social enterprise focus on the delivery of public services. As I set out in my last blog, this is important but at this point in the economic cycle, we must also consider the role it can play in wealth creation. The last Labour government understood social entrepreneurship could reinvigorate both the private and public sectors but perhaps were too quick to assume all entrepreneurship would come from the private sector.
However, Portugual’s economy is in a far worse position than ours. There are 89 people chasing every job vacancy and 250,000 people, mostly young, have left to seek employment elsewhere, this is equivalent to 1.75 million people leaving the UK. Portugal‘s right-wing government is faithfully implementing the troika imposed austerity programme.
To counter this the socialist mayor of Lisbon, António Costa, has placed social entrepreneurship at the front and centre of his plan to reinvigorate the city’s economy. After the mayoral elections in 2010 Costa moved the mayoral office from its former, palatial, City Hall to a site in Mouraria, a run-down and neglected neighbourhood plagued by unemployment and drug dealing. Using a mix of European funding, participatory budgeting and direct grants the mayor then piloted a series of ‘interventions’. A criterion for funding was that applications had to come from coalitions of different groups.
Joao Meneses, professor of social economy at the Portuguese Catholic University and the mayor’s special advisor, said: “This brought people together. Mouraria is historically a centre for immigration, we needed to build the social capital which would make the interventions sustainable.”
Completed projects include a community kitchen, social club, a cafe/gallery, a hostel and an outdoor food market. Job centre Mouraria + Emprego, which is run by a social enterprise, combines innovative individual techniques such as personal branding with training to place local people in jobs but they also want to grow jobs locally.
Joao said: “Mouraria is an open air social enterprise incubator. We are providing the social and physical resources to encourage new social enterprises. Start up Lisboa helps new business across Lisbon and in Mouraria we have already trained up 35 social enterprises of which the most successful so far is [the recycled fashion manufacturer] Garbags “
He took me to Mouraria’s Fab Lab, which has recently opened in a disused rabbit abattoir. Like all Fab Labs it allows people to book different digital fabrication tools, but here enabling commercial product manufacture processes including circuit boards and 3D printers is emphasised.
Joao said: “Here small businesses can prototype new products quickly and every time they use a machine we ask them to blog about their experience, so everyone learns.”
The north east of England has some of the highest rates of unemployment in the country and has little help from central government so social enterprises are taking on the challenge of regeneration. In my constituency the Blakelaw Ward Community Partnership was formed initially in response to the unprecedented cuts to local government funding. Newcastle is losing £100m over three years, which has put many services at risk.
Ward councillor David Stockdale explained: “The first stage is securing public services. The council had to cut funding to the local library, so the building is being asset transferred to a partnership. We’re opening a cafe and a crèche to generate the income we need to keep the library going and we’re now researching how to support social enterprise to create new jobs.”
The European Commission is determined to help. It provided close to half the €13m invested in Mouraria but their funds could only be used for buildings and infrastructure. The Social Business Initiative sees social enterprise as a driver in economic growth and has succeeded in making it a priority for both the ERDF and European Social Funds. It is expected the new 2014-20 EU funding will offer a mix of structural and social – hard and soft – funding, providing projects have majority control in the hands of the third sector.
These funding streams could be used by Blakelaw Ward Community Partnership, Lisbon Council and potentially by a future Labour government to support sustainable economic growth through social enterprise. This government, obsessed with privatising public services rather than implementing an industrial policy, cannot see we should be using the recovery to support new vehicles for wealth creation – ones built with social equity.
Chi Onwurah is the Labour MP for Newcastle upon Tyne Central.