The push by local councils to outsource services is proving a boon for the social enterprise sector.
As councils across the country sell vast chunks of social care, state services are increasingly offered by private contractors suffering from low pay, long working hours and high turnover.
Many local authorities feel they are left with little option. The alternative that has emerged is social enterprise. And in the social care sector, social enterprises are increasingly competing on price with the private sector while out-performing on quality.
Social enterprise within social care is not a new phenomenon. But the speed of growth certainly is. Sandwell Community Caring Trust (SCCT) is one of the original 'spin-offs', having broken away from Sandwell council in 1997. "There are some big opportunities for social enterprise now," says chief executive Geoff Walker, who argues that SCCT and the social enterprise model in general offers a template for turning around financially unsustainable public services. "The unions are beginning to understand that coming to organisations like us isn't privatisation. My values and principles are exactly the same as they were 20 years ago when I was in the council. They are exactly the same as the unions'. I just go about delivering them in a much more efficient and effective way [than before]."
Gill Coupland set up Angels Housekeeping, a social enterprise offering social care in Leeds, in 2005. She says: "the sector just continues to grow, particularly [for] older people. Councils are withdrawing from being the biggest providers and there are a lot of in-house services going outside ... also people want to live at home more independently, and ... council are really supporting. It is what people want, and it is also to do with cost." She has since set up Social Business Brokers, a council-contracted consultancy with the mandate of supporting local social care social enterprises.
The growth is such that some fear the more lucrative contracts will get snapped up by the private sector. The SCA Group is one of the larger social care social enterprises employing over 600 staff, yet its CEO Maria Mills believes that councils are preferring even larger contracters. "There's still work we can go for and win that is of a manageable size, and we have been able to diversify into wider customer groups - mental health work, community work - but some other contracts are just off our radar because we just don't have the turnover and the financial collateral to compete."
Such contracts, says Mills, run into the hundreds of millions a year. She has also come across some "strange decisions" where private organisations with little track record in social care have won contracts essentially on price alone. It's a trend that could get worse.
In Leeds, Coupland informs that a typical contacted price for care is £14 an hour. "It's really difficult to provide quality care services for £14 an hour", says Coupland, who has even come across councils purchasing care by the minute. In such cases the pressure to be quickly in and out of a resident's home is strong.
The SCA Group have had to "walk away" from tenders because it felt the level of care it provides was not possible for the price. "We have been making a lot more of those decisions," says Mills.
One option is to use its private work tarriffs to subsidise its public sector work. It's something that several social enterprises report having to do. "Sometimes I think that makes sense", says Mills, "and sometimes I wonder if we are subsidising a system that isn't working and isn't really equating the true cost and price of doing that work."
Walker, however, is adamant that SCCT competes on price without lowering standards. "Everybody says you can't keep pay and conditions the same, improve quality, and do it for 40% less [cost]. I would have always said that." He doesn't agree now, he said.
"When we left the council 15 years ago, our workers that transferred with us had 22 days off sick [per year] on average. We had a recent Tupe transfer where that was up to 30 days average ... Our staff [now] average less than a day. If you can go from 30 days to less than a day, you can save £300,000-500,000 a year in an average elderly care home." Management and admin costs also reduced from 22% to less 10%. The first thing he did, he says, was get rid of HR.
As for competing against the private sector, he says: "We've got a head start because we're not looking for 20% to takeaway in shareholder value. We recycle [profit] into wages, treating the staff well and providing an excellent service. If you provide a really good service, people will want it."
That is being put to the test by personalisation. With personal budgets, those in need of care receive money from the council to spend on whichever providers they wish. "I would love all of our customers to have a personal budget because then they are the people that can drive the service that they want", says Mills. But pace of take-up has been slow. "A couple of years ago the target was to get 100% of people on personal budgets by April [2013]. In some customer groups, such as elderly, it's still only around 15%."
Coupland also believes that personal budgets will help drive the growth of social enterprises offering care. "A lot of older people are more used to being service users rather than customers. But I think customers are changing ... they can chose to have a quality care service from an organisation that does whatever it is they want them to do rather than be 'done to' by the local authorities."
Posted by Tim Smedley
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