LONDON — Britain’s role as a pioneering country for social entrepreneurs could suffer as it prepares to leave the European Union after decades of the government actively promoting business leaders seeking to do good, experts said.
A Thomson Reuters Foundation poll of experts in the world’s 45 biggest economies ranked Britain third after the United States and Canada as having the best environment for entrepreneurs using businesses to help tackle social problems.
From The Big Issue newspaper sold by homeless people and ecotourism attraction the Eden Project to Divine Chocolate, a company co-owned by cocoa farmers in Ghana, Britain’s social enterprise sector has grown rapidly in 20 years.
Britain launched a social enterprise strategy in 2002, the first social impact bond in 2010, introduced social investment tax relief and brought in a law in 2013 calling for all public sector commissioning to factor in social value.
But economic uncertainty after Britain’s decision to leave the EU poses significant financial and operating challenges for the sector, said Peter Holbrook, chief executive of Social Enterprise UK, a membership organization for social enterprises.
“While there is no blueprint to know what will happen after Brexit we can expect there will be less government support, financially and in terms of policy, because there will be some economic contraction,” Holbrook said.
The Thomson Reuters Foundation poll, carried out in partnership with Deutsche Bank, the Global Social Entrepreneurship Network (GSEN) and UnLtd, foundations for social entrepreneurs, found Britain came seventh when experts were asked if government policy supports social entrepreneurs.
South Korea, Singapore topped the list with France tied with Chile in third place followed by Canada and the United States.
In Britain government records identify about 70,000 social enterprises - loosely defined as ventures combining business with social purpose - employing nearly one million people.
But leaving the EU could bring new challenges such as delays on public sector contracts - a source of income for larger social enterprises - and social businesses may find it harder to borrow money amid financial uncertainty, Holbrook said.
In Britain, as elsewhere in the world, public funds have come under increasing pressure from shrinking economic growth, making governments more aware of the potential of social enterprises to promote a more equitable and sustainable society.
Nigel Kershaw, executive chairman of the Big Issue Group, said the sector had grown since the 1990s out of co-operatives and community enterprises wanting to use business to create social change.
Growing demand from the government to buy services from charities has also boosted the sector, Kershaw said, a factor he said he expects to continue despite Britain’s EU exit.
The poll found that selling to government was one of the main challenges faced by the growing sector.
The Big Issue, one of Britain’s best-known social enterprises, was formed in 1991 as a business solution to a social crisis and inspired street papers in more than 120 countries.
“It’s about finding sustainable business solutions that are making a difference to people’s lives throughout the UK in a time when we need a more innovative way of doing business,” Kershaw said. — Reuters
