Review of Rural Social Enterprise in England

Review of Rural Social Enterprise in England

Final Report

This report was prepared by a research team comprising Peter Couchman and Mike Perry from the Plunkett Foundation, with support from a range of social enterprise and rural support organisations. The opinions expressed in the report are those of the authors and the organisations which they represent.

The research project and report were financed by the Department for Environment, Food and Rural Affairs and the Office for Civil Society within the Cabinet Office.

The report is published jointly by the Plunkett Foundation and the Department for Environment, Food and Rural Affairs. Questions relating to the report or requests for permission to use the materials should be addressed to:

Plunkett Foundation

The Quadrangle

Woodstock

Oxfordshire, OX20 1LH

Tel: 01993 810730

Email:

www.plunkett.co.uk/communitytransport

© Crown copyright 2011

You may re-use this document (not including logos) free of charge in any format or medium. You must re-use it accurately and not in a misleading context. The material must be acknowledged as Crown copyright and you must give the title of the source document.

December 2011

Contents

Foreword

Summary

1. Introduction

What is rural social enterprise?

Aims and Objectives

Approach and Methodology

2. Data analysis of existing social enterprise datasets

Co-operativesUK Database of Co-operatives in the UK

Social Enterprise Coalition State of Social Enterprise Survey 2009

3. Surveys of Sub-Sectors of Rural Social Enterprise

Sub sector surveys

4. Conclusions

Summary of Conclusions

Appendixes

Appendix A – Methodology

Appendix B – Rural Social Enterprise Policy Papers

Co-operative and Community-Owned Pubs

Forestry and Woodlands Social Enterprises

Faith Buildings and Social Enterprise

Foreword

Rural communities are facing a number of challenges. Some public and private services are being withdrawn, which can often exacerbate issues of access to services in these areas to a greater extent than urban areas, house prices are often higher which can lead to some local people being priced out of the market and the cost of living is increasing which has impacts in both rural and urban areas.

Despite these challenges, social enterprises in rural communities are playing an increasingly prominent role in providing services to rural communities where public and private sector have failed. This research project is the first systematic attempt to look across the social enterprise sector operating in rural communities to see what social enterprise does, where it operates and why. The purpose was to find out the range of economic, social and environmental impacts that social enterprises generate in rural communities and how they do this.

It is clear that despite recent success, there is a great deal of pressure on existing social enterprises and rural communities to use social enterprise approaches to address the challenges that they are facing in a sustainable way. For the first time, this report identifies how this is being achieved.

Rural social enterprises are often seen as shining examples of what is possible. Rarely do people see the hard work, creativity and commitment behind this. This report aims to identify what makes rural social enterprises tick and to be honest about some of the challenges that they face.

In an era when reducing the deficit is a key government priority, rural communities are under pressure to use social enterprise approaches to help themselves to address the challenges that they face whether this is saving their local shop or pub, putting in place high speed broadband services, addressing affordable housing, providing transport services or a whole range of other issues.

Due to the complexity of the social enterprise sector, we are conscious that this research report is the starting point for a better understanding of the sector, not the end. We therefore look forward to working with the partners who have assisted with this work and others to help provide an increasingly clear understanding of social enterprise in rural communities.

We would like to thank our colleagues at Defra’s Rural Communities Policy Unit and the Cabinet Office for commissioning this important piece of research and for their help and support throughout.

Peter Couchman

Chief Executive, Plunkett Foundation

Summary

The Plunkett Foundation and other organisations supporting the diverse range of rural social enterprise across England believe that there is considerable potential for rural social enterprises in all forms to address the challenges faced by rural communities in an economically, socially and environmentally sustainable way.

The project was conducted at an important time in the public policy process with the combination of the drive for the Big Society and the deficit reduction programme providing both great opportunities and many challenges for rural social enterprise and rural communities overall.

The Government’s Big Society[1] approach requires people and communities to come together to improve their own lives by transferring power from Whitehall to local communities. Rural social enterprises have been used as key examples of the Big Society in action – communities taking over and running their local shop and pub are just two that have been referred to.

The increasing requirement for communities to take control of the issues affecting them will mean that more communities should want and need to adopt social enterprise approaches to deliver key services or address the challenges they as communities are facing. Community based enterprise approaches may be regarded as key in achieving this change. Supported by Defra’s Rural Communities Policy Unit, the Plunkett Foundation worked with a range of rural and social enterprise support organisations on this research to enable different types of rural social enterprise to learn from each other for the first time.

We would particularly like to thank the following individuals and organisations for their help, support, and expertise in undertaking the research project:

ACRE, Community Retail Team at Plunkett Foundation, Making Local Food Work, Soil Association, Country Markets, FARMA, ABCUL, Community Transport Association, Locality, Community Broadband Network, INCA, National Housing Federation, Bob Paterson, ReAlliance, CoRE, H2OPE, Energy4All and Shareenergy.

This report summarises the activities and outcomes of this project.

The Project

The aim of the project was to identify the scale and scope of social enterprise in rural England and to assess their economic, social and environmental impacts. The project comprised of the following elements:

·  Data analysis of key existing social enterprise datasets

·  Surveys of specific ‘sub-sectors’ of rural social enterprise

·  Analysis of findings and preparation of reports of each sub sector survey

·  The identification of barriers, opportunities and impact and recommendations made for each

The outcome of each of the elements of the project is summarised in turn.

Analysis of Existing Datasets

Analysis of prominent existing rural social enterprise datasets was carried out in order to assess principally the economic scale and scope of social enterprise in rural England. Whilst there are limitations to each dataset, they are the most comprehensive in existence on a national level. Key findings are summarised below.

Co-operativesUK’s database of co-operatives in the UK:

·  There are 489 co-operatives identified as being located in rural England (11% of the total number of co-operatives in England)

·  Rural co-operatives in England generate £2.98bn annual turnover (11% of the total turnover of co-operatives in England)

·  Rural co-operatives have at least 90,000 members

·  £260 million held in members reserves

·  Rural co-operatives operate across virtually all areas of the co-operative economy

·  Agriculture is the dominant form with 241 co-operatives in England

·  Country Markets, fishing co-operatives, housing co-operatives and community shops are also prominent sectors of the rural co-operative economy

Social Enterprise UK (formerly the Social Enterprise Coalition), the UK national body for social enterprise, has undertaken the State of Social Enterprise 2009 survey:

·  57% of social enterprises surveyed serve or trade in rural communities.

·  Rural serving social enterprises cover a wider geographical market than non rural and there is a predominance in the East Midlands, South West, East of England and North West

·  Company Limited by Guarantee, Charities and Community Interest Companies were the dominant legal forms used by rural serving social enterprises

·  Rural serving social enterprises have a higher mean average turnover than non rural serving social enterprises

·  A median of 6 employees per rural serving social enterprise

·  Finance and funding is seen as the main barrier to growth

Surveys of Sub Sectors of Rural Social Enterprise

The sub sector surveys identified the following key outcomes:

·  Different forms of rural social enterprises operate in different types of rural communities and specific forms develop in clusters where a number of a specific type of rural social enterprise will develop in the same geographical area.

·  The failure of the public or private sector to deliver a service is one of the main drivers for establishing a rural social enterprise. With the use of local knowledge about their market these social enterprises develop business models that can survive and thrive in areas where other types of business models may struggle.

·  Rural social enterprises are growing and some sub sectors are growing considerably faster than others due to differing average set up times for example community-owned shops typically take between six months and one year to open whereas a Community Land Trust may take a number of years.

·  Volunteers are key for most rural social enterprises as they represent an engaged and supportive community and are also often key for the delivery of the business model and governance arrangements.

·  Most rural social enterprises are profitable and profits and turnover are growing. However, their true potential may be masked by reinvestment in existing business in order to diversify or develop.

·  The development of many forms of rural social enterprise is hindered by the requirement to raise significant levels of finance for capital purchases at the outset. This can prevent or delay rural social enterprises from starting up and developing.

·  The operating structures that rural social enterprises adopt vary widely in approach, although there appears to be some commonality to the approach by some specific sub sectors.

·  Asset ownership is transformative but the finance required to purchase an asset is significant and can delay the rural social enterprise from operating as soon as it would like to.

·  Rural social enterprises have diverse support needs and therefore seek support from a range of organisations. Recruiting, retailing, marketing and finance raising volunteers are the four common support needs across all rural social enterprise sub sectors.

·  Barriers faced by rural social enterprises are significant but can be overcome. Government regulations are perceived as a significant barrier for a number of rural social enterprise sub sectors.

·  Rural social enterprises access finance from a range of sources and methods ranging from grants and loans to community shares. Some forms of finance are becoming less available (some grants) so rural social enterprises should be supported to raise finance where possible from sources including Community Shares.

Areas for Discussion

For public policy makers:

·  As rural social enterprise is an area of interest for a range of Government departments there is a need for cross departmental co-ordination when developing policies and programmes impacting upon rural social enterprises.

·  Rural social enterprises address some of the most entrenched issues facing rural communities and could unlock many positive and innovative solutions for services in rural communities.

·  Rural social enterprises have a significant economic impact whilst also providing a wide range of economic and social outcomes. The ability to quantify these impacts will assist current and future policy making.

·  Removing barriers to rural social enterprises starting up, trading successfully and developing is key and public policy makers could consider how to address barrier busting for rural social enterprises.

·  Rural social enterprises are influencing behaviours in their communities that are having positive impacts on individuals and communities. Rural social enterprises can emerge as trusted messengers able to influence positive behaviours in their communities.

·  Access to finance is a key barrier facing rural social enterprises and emerging models of finance such as Community Shares, Social Impact Bonds and the Big Society Bank can be used to support their development.

For rural social enterprises:

·  Rural social enterprises need to learn from each other to avoid reinventing wheels. This includes similar enterprises and those using similar models to achieve something completely different.

·  Rural social enterprises need to be active in identifying barriers that the government could help to reduce or remove.

·  Rural social enterprises need to consider involving the community that they rely on within their enterprise model.

·  Rural social enterprises play a key role in promoting the model that they have used to other rural communities.

·  Rural communities need to engage in community led planning processes to get the best rural social enterprise solution

·  Rural social enterprise face common barriers and challenges and there is a need to address these early on in their development.

For rural and social enterprise support organisations:

·  The most commonly cited barriers affecting rural social enterprises are recruiting and managing volunteers, access to finance and marketing their products and services effectively to their community and other potential customers. Support organisations should look to work alongside Government stakeholders and rural social enterprises to address these and other barriers.

·  As rural social enterprises rely on a range of support organisations such as Plunkett Foundation, members of the Rural Community Action Network, Locality, Co-operatives UK and many more, support organisations need to collaborate to provide the range of services they require.

·  Support organisations should seek high profile opportunities to raise awareness of their services to ensure that the support rural social enterprises receive is appropriate.

Introduction

Aims and Objectives of this research project

Aim: To review the role of social enterprise in rural England to understand the importance of social enterprises to the economy, society and environment of rural areas. Deliver a report that can be used to inform policy and initiate practical support actions.