Worms squirming on a plate where spaghetti should be; the school lunch queue scattering in horror, the awfulness of the whole thing etched on pupils’ faces, possibly leading to a need for counselling in later life.
As a child about to leave the relative security of junior school to the unknown realms of ‘big’ school, this was a scene from children’s TV series Grange Hill which weighed heavily on my mind and, shall we say, caused me a certain amount of apprehension in the summer holidays between the two. This despite the fact that I actually took a packed lunch instead of school dinners.
All of this is a very roundabout way of me getting on to a can of worms, which is perhaps what the shadow social enterprise minister Chi Onwurah has opened up in her recent announcement that Labour would introduce a legally binding definition of “social enterprise”. Now, don’t get me wrong – as a solicitor I love a good definition, and having a neat phrase that we could roll out and apply would, I’m sure, put a spring in to my step. The difficulty is that I think getting everyone to agree on a legally binding definition would be very tricky indeed. After all, the sector (at the very least) encompasses a wide range of people and bodies including sole traders, some charities, and CICs. I have also seen the topic widely debated in places such as blogs and LinkedIn and know the passions that this topic can enflame.
The early drafts of the Public Services (Social Value) Act gave defining social enterprise a go before it was negotiated out as the Bill progressed through parliament. That included the key elements of (a) a business, (b) designed to improve the social or environmental well-being of the UK (or part of it), and (c) the majority of the profits available for distribution are reinvested for achievement of that purpose.
SEUK considers that the key features of a social enterprise are: (a) have clear social and / or environmental mission in the governing documents, (b) generate the majority of income through trade, (c) reinvesting the majority of profits made, (d) be autonomous of the state, (e) be majority controlled in the interests of social mission, and (f) be accountable and transparent. The Social Enterprise Mark has some similar features but also includes a variation – that on dissolution all residual assets are redistributed for the purposes.
Now, you’ll see that I’m deliberately not trying to put forward my own definition here. My view is that it’s a bit like trying to close the stable door after the horse has bolted. After all, whilst the phrase ‘social enterprise’ is relatively new, the sector really has its roots in the Rochdale Pioneers Society of 1844 and to try to bring together everything that has happened since in one easy-to-use definition is not going to be a stroll in the park.
However, if you look at property law the courts are able consider the heart of an arrangement to see what it really is, ignoring the label given to it in the process: is it a lease or a licence? The same is true in employment law – in what might be labelled a secondment arrangement, is a person really a secondee or an employee?
I wonder if the answer is to seek to do the same here, as surely it is what a social enterprise actually does that counts rather than what it is called. This in turn links to a challenge for organisations to be able to clearly demonstrate their social value – something which is at the heart of the Public Services (Social Value) Act.
I appreciate that how you actually go on to demonstrate social value is a different can of worms altogether and, frankly, one can of worms is quite enough for me.
Simon Lee, Hempsons Solicitors
Simon has provided legal advice to social enterprises, charities, and other community and voluntary sector bodies for over 10 years. He is passionate about the sector and is able to advise on a wide range of matters affecting such organisations including legal structures, contracts, funding and governance issues.