The 'social enterprisation' of public services: To what extent an alternative model to outright privatisation?

Social enterprise has recently attracted considerable academic and policy interest within Western countries and beyond (Defourny and Kuan, 2011; Kerlin, 2009; Lyon and Sepulveda, 2012). Its rapid ascension into mainstream... [ view full abstract ]

Social enterprise has recently attracted considerable academic and policy interest within Western countries and beyond (Defourny and Kuan, 2011; Kerlin, 2009; Lyon and Sepulveda, 2012). Its rapid ascension into mainstream policy arena has materialised in the establishment of influential bodies such as the EU Council of Associations of General Interest, the US Office of Social Innovation and Civil Participation and the Social Enterprise World Forum, which have sought to raise the profile of the sector. In the UK, it has rapidly moved from its past modest position on the margins of social and economic policy to currently occupying a key position within wider debates over welfare reform (Cabinet Office, 2010). Throughout the 2000s social enterprises (including charities, VCOs and cooperatives) became the target of numerous policy initiatives which have sought to support ‘existing’ organisations to become public service providers.

Drawing upon historical institutionalism (Béland, 2005; Schmidt, 2010; Streek and Thelen, 2005), this paper argues that a ‘critical conjuncture’ took place during the time that New Labour was in office (1997-2010) which led to both the official enactment of social enterprise as a vehicle for social welfare and economic change and its consequent institutionalisation as a subject of public policy. This analysis is extended here to argue that the uninterrupted calls for social enterprise to play greater roles as part of the British governments’ welfare reform agenda no longer is limited to support ‘existing’ organisations but now critically entails the deliberate creation of ‘new’ organisations from within the public sector, the so-called ‘public sector spin-outs’ social enterprises or mutuals (Cabinet Office, 2011).

While the phenomenon initially comprised the health and social care sectors it is now being expanded towards other areas of public services including education, probationary services and so on. It is this move towards state-backed wholesale social enterprise creation that is referred here as the ‘social enterprisation’ of English public services (Sepulveda, 2009; forthcoming). In short, ‘social enterprised’ public services are those former public services which have been transferred from state ownership to independent businesses, which commonly adopt a ‘staff-led’ social enterprise model, and are socially ‘owned’ and managed by former public servants who took part into or led the separation of the service from the public sector. To put this into context, in July 2014 the British government celebrated the birth of the 100th spin-out social enterprise which the government reckons that they as a distinctive sector employed around 35,000 people and delivered £1.5 billion of public services.

The fact that the British government is explicitly committed to transform the National Health Service (NHS) into ‘the largest social enterprise sector in the world’ (Hall et al 2012) and considering that many voices are currently calling for similar social enterprising solutions to struggling welfare systems internationally, we think that the policy move towards the ‘social enterprisation’ of public services is likely to continue gaining political momentum in the UK and beyond. This raises a number of questions at theoretical and practical levels which are important to the spirit of EMES Conference. Does employee ownership and involvement in decision-making guarantee that organisations become more socially accountable, efficient and financially sustainable? More generally, to what extent and how the move towards the ‘social enterprisation’ of public services represents an alternative to outright privatisation which have dominated the policy agenda since the 1980s? Empirically, the paper draws upon on an original study of 30 spin-out social enterprises in England. Qualitative interviews were conducted with the organisations’ directors, senior managers, staff and users as well as with their external stakeholders (commissioners, funders and trade unions) and with a sample of policy makers.