University of Liverpool research on the value of the social economy in the Liverpool City Region (LCR) has led to new strategic initiatives supported by the Metro Mayor and Combined Authority. Representatives of the social economy including social enterprises, community businesses, cooperatives, credit unions, charities and community interest companies are now formally incorporated into the governance and policy-making structures of the Combined Authority. New social investment opportunities have been facilitated to finance social entrepreneurs and social enterprises, who have accessed new opportunities for development, with the sector growing by over 25% to almost 2,000 social enterprises over the period 2016 to 2020, prior to the pandemic. This impact has been recognised widely and was cited in a recent report published by UNRISD.
The LCR is one of the core English city regions with the fourth largest metro area population outside London. It is a place overwhelmed by decades of stubborn social and economic problems, while at the same time it has a hugely diverse social economy that generates a revenue of some £3 billion per annum, has assets of up to £4 billion, with around 45,000 employees. Despite overwhelming structural weakness in the local economy and a vibrant social economy, Alan Southern and colleagues set out to question why local governance agencies focused on so-called high growth sectors. These are the very sectors that have failed to include disconnected communities and those high employment volume sectors that often do not provide secure employment and rely instead on casual forms of labour.
The research we conducted identified how social enterprise can be a route out of chronic problems facing the LCR economy. A socio-economic evaluation of the social economy in the LCR enabled the Metro Mayor and Combined Authority to introduce new institutional structures and build strategy through insight that shows:
- How structural weaknesses in the local economy can be addressed through a vibrant social economy
- Why local governance agencies continue to marginalised social enterprise and solely focus on so-called ‘high growth’ sectors in the LCR economy
- The economic and social value of social enterprise in LCR, an insight that has reached across the city region and made economic planners and policy makers pay attention
- How, if organised collectively, social enterprises would project a powerful voice and influence the Combined Authority to develop and implement policy.
Three main impacts have emerged from this research to date.
First, in March 2020 the LCR Local Industrial Strategy explicitly cited this work to demonstrate the value of the social economy to the city region. At this point the Combined Authority (CA) recognised the value of the social economy in achieving one of their main objectives, that of an inclusive economy for the whole city region. Despite the global Covid-19 pandemic, this line of reasoning has become an embedded feature in the work of the CA, who were quick to partner with social enterprises in an early response to the public health crisis.
Second, the first meeting of the Liverpool City Region Social and Solidarity Economy Reference Panel took place in the second half of 2020. This was significant because for the first time it provided those practitioners in the social economy with a voice into the Combined Authority and Metro Mayor. The Panel is already looking at how to develop a strategy for the social economy, one that impacts the whole city region economy, how to build better communication and marketing for the sector, and how anchor institution procurement can support social enterprise.
Third, with local activists, the Combined Authority and Power to Change have been instrumental in forming a new social investment vehicle for those organisations in the LCR social economy. This is a unique development in that what is being set up, the organisation itself a Community Interest Company, will ultimately be member-led. Initial funding of £6 million was secured and at the beginning of 2021 new forms of finance was being awarded to social enterprises.
The research behind each of these initiatives was instrumental in new ideas forming. So much so, that global institutions such as the Global Social Economy Forum and the United Nations Research Institute for Social Development (UNRISD) have reported on them and shared the experiences with other social economy representatives in a range of cities.
The root causes of poor levels of economic growth and the marginalisation of communities in economic activity are related. By advancing the social economy and encouraging new social enterprise and growth in the sector, local politicians, policy makers and social entrepreneurs have been able to expand their efforts to provide longer term sustainable impact that is directly associated with this body of work.
Dr Alan Southern
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