Research from Communities Scotland Report 71. Registered Social Landlords and the social economy

Transcription

1 Research from Communities Scotland Report 71 Registered Social Landlords and the social economy

2 Registered Social Landlords and the Social Economy February 2007 Research and Evaluation Communities Scotland, Thistle House 91 Haymarket Terrace, Edinburgh EH12 5HE i

3 Contents 1. Executive summary iii 2. Introduction 1 3. Wider context 2 4. Characteristics of RSLs in the survey 3 5. The case studies 4 6. Outsourcing of services 5 7. Subsidiary organisations Procurement Barriers Issues for the expansion of the sector Conclusion Sources 21 Appendix 1 Glossary of terms 22 Appendix 2 Communities Scotland resources 26 Annexe A Questionnaire 29 ii

4 1 Executive summary This research was carried out to investigate the use registered social landlords (RSLs) make of organisations in the social economy sector when procuring services. The principle method of research was a postal survey of all RSLs, including Abbeyfields, which was distributed in November Of the 271 questionnaires sent out, 72 were returned, a response rate of 27 per cent. The survey was supplemented by six case studies. Based on the number of survey respondents and information gathered from the case studies: 55.5 per cent of RSLs outsource services, with 25 per cent outsourcing to social enterprises Larger urban RSLs (those with more than 250 units) have more opportunity to trade with social enterprises as they have a higher number in their local area. They also procure sufficient services to help social enterprises become financially sustainable. Very large urban RSLs must consider whether a small or medium sized social enterprise can offer the security and accountability demanded by contracting procedures and tenants All RSLs interviewed stated that they would only trade with a financially selfsustaining social economy organisation, rather than with an organisation who were reliant on grants in order to be viable Contracting to smaller organisations in the social economy that are not financially self-sustaining is deemed as being too high risk There is enthusiasm for social enterprises to access loan funding as it is considered that this would encourage business-like behaviour which would give RSLs more confidence in trading with them There appears to be benefit in RSLs working together when procuring services, and also for social economy organisations to work in partnership, in order to share knowledge, experience and expertise 18 per cent of RSLs have subsidiaries and interviews show that RSLs who established subsidiaries would have investigated procuring services from existing social economy organisations had this been an option. iii

5 2 Introduction 1. The objective of the research was to investigate the extent to which RSLs procure services from social enterprises, and what those services are. To meet this aim a postal survey of RSLs, including Abbeyfield Societies, was carried out in November Six case studies were also undertaken in order to further explore RSLs engagement and perceptions of the social economy sector. 2. The purpose of the postal survey was to map how many RSLs routinely procure from social enterprises or social economy organisations, and to establish what services they procure from these organisations. Additionally, the survey enquired about the following issues: Characteristics of RSL respondents Services outsourced Subsidiary organisations Procurement practices - Dedicated procurement units - Important elements in procurement. 3. All RSLs were sent a questionnaire (271 altogether), and 72 were returned, a response rate of 27 per cent. The questionnaire is attached as Annexe A. 1

6 3 Wider context Definitions 4. The issue of defining the sector and what constitutes a social enterprise or a social economy organisation is not tackled in this report. Instead we have included a Glossary of terms as Appendix 1 in an attempt to illustrate the various interpretations of how to define the sector. We are also aware that many RSLs consider themselves to be social enterprises and that they share many of the characteristics of organisations considered to be within the sector. But for the purposes of this piece of work we have treated RSLs as separate entities. Wider role 5. Throughout case study interviews there was significant mention of Wider Role funding and how beneficial RSLs have found it. Projects funded by Wider Role are many and varied, and outcomes are often difficult to quantify. However, of the RSLs interviewed, each that had accessed the fund had found it to have been valuable. For more information on Wider Role see the Glossary of terms in Appendix 1. 2

7 4 Characteristics of RSLs in the survey Company form 6. Of the 72 respondents to the survey: 78 per cent classified themselves as an Industrial and Provident Society 63 per cent were Registered Charities 24 per cent classified themselves at both of these. 7 per cent characterised themselves as a Company limited by guarantee 7 per cent classified themselves as all of the above. None of the RSLs who responded fell into the categories of Unincorporated Association or Trust. Types of RSLs 7. Types of RSLs to respond to the survey were: 43 per cent Large Urban RSLs 15 per cent Small Urban RSLs 15 per cent Large Rural RSLs 7 per cent Small Rural RSLs 12.5 per cent National RSLs 5.5 per cent Housing Co-operatives 18 per cent categorised themselves as supported or highly supported accommodation. Chart % of RSLs Highly Supported accommodation Large Urban Small Urban Large Rural Small Rural National Housing Co-operative Type of RSL 8. Chart 3.1 shows the breakdown of RSLs by geographical and population area as defined using the peer group classification displayed in the Regulation and Inspection Scottish Registered Social Landlord Statistics This shows the percentage of RSLs under each classification. The profile of the RSLs who responded to the survey reflects the overall distribution of the RSL sector at

8 5 The case studies 9. In order to further develop data that the survey identified, detailed case studies were carried out through interviews with six RSLs. The purpose of the case studies was to gain a greater understanding of the different issues affecting RSLs in various areas. Also to gain a general understanding of RSLs concept of social enterprise and social economy organisations. Additionally, the case studies sought to identify any potential or current barriers to trading with the sector. 10. The studies undertaken were chosen to represent the breadth of different RSLs that operate in Scotland. Specific RSLs were chosen using the following criteria: Geographical area Size of RSL Whether they have subsidiary organisations Whether they have dedicated procurement units 11. Throughout the survey RSLs were asked about social economy organisations, however, in interviews most RSLs were specific about contracting to organisations more commonly defined as social enterprises, rather than organisations in the broader social economy. 12. The RSLs chosen cover 11 out of 32 local authority areas; Table 1 shows the case study areas: Table 1 Name of RSL Size Subsidiary Organisation Procurement Unit? CS Area Office Local Authority area Lochalsh and Skye Housing Association (p.7) 400 units, Large Rural No No Inverness Highland Kingdom Housing Association (Fife) (p.8) Almond Housing Association (Livingston) (p.11) 2600 Large Urban 2300 Large Urban No No Lothian, Borders and Fife; Tayside and Forth Valley Yes No Lothian, Borders and Fife; Tayside and Forth Valley East Lothian; Midlothian; West Lothian; Falkirk East Lothian; Midlothian; West Lothian; Falkirk Hillcrest Housing Association (Dundee) (p.12) Glasgow Housing Association (p.14) Abbeyfield Society, Black Isle (p.15) 5,000 National RSL Units Large Urban Supported Accom, 7 beds Yes No Lothian, Borders and Fife; Tayside and Forth Valley Dundee; Angus; Perth & Kinross; Fife; Edinburgh No Yes Glasgow Glasgow No No Inverness Highland 13. RSLs that do not outsource services were not selected for case studies, as the objective of the research was to map the current activity in the sector. 4

9 6 Outsourcing of services 14. One of the objectives of the research was to find out if RSLs outsource services, and if so, which services. Of the respondents, 56 per cent (40 RSLs) outsource services in the course of their business. 15. Chart 3.2 shows the service areas in which RSLs outsource: Chart % of RSLs Services for young people Environmental Maintenance Communtiy care workers Training and Employment Recycling Childcare Services for the elderly Housing Management Housing Maintenance Professional Services Advice Services Transport Services Service Areas to which RSLs outsource 16. No RSLs that responded to the survey contracted work out to community care services, and very few outsourced childcare provision (1 per cent). The areas that receive the most significant amount of business are: professional services (49 per cent) housing maintenance (47 per cent) environmental maintenance (36 per cent) training and employment (22 per cent). 17. The most significant beneficiaries are micro-businesses, small businesses and social economy organisations. This could suggest that RSLs consider the impact of their procurement upon the local economy, which may in turn suggest that there is an implicit social consideration in their procurement procedures. 18. Other than Glasgow Housing Association, the case study RSLs said that there is an advantage in contracting with local organisations, which tend to be small or micro businesses. Glasgow Housing Association, due to its scale and the volume of its procurement, tends to procure from large organisations; however procurement strategies are determined by priorities decided at a local level. 19. When outsourcing services, RSLs contract from a variety of different organisations. 5

10 20. Chart 3.3 shows the type of organisation those who responded to the survey contract out services to: Chart % of RSLs Large Businesses Medium Businesses Small Businesses Micro Businesses Local Authority Other Public Sector Bodies Social Economy Organisations Organisations RSLs contract from 21. Of the 72 RSLs that replied to survey 18 per cent to 25 per cent outsource to social economy organisations and the services provided are varied. 22. Chart 3.4 explores the services provided in more depth: Chart %of RSLs Services for young people Environmental Maintenance Communtiy care workers Training and Employment Recycling Childcare Services for the elderly Housing Management Housing Maintenance Professional Services Advice Services Transport Services Social Economy Service Areas 6

11 23. The survey showed that advice services are the most commonly used social economy service, closely followed by services being delivered in the training and employment sector. 24. None of the RSLs who took part in the case study interviews are providing advice services, though Glasgow Housing Association is considering further development in this field. In the training and employment field, Hillcrest Agency Services Limited one of the subsidiaries in the Hillcrest Group - is dedicated to training and employment opportunities. 25. In the case studies, the most common areas where social economy organisations were active, were housing maintenance and environmental maintenance. There is also growing interest in the possible opportunities offered to the sector by recycling and renewable energy. Case Study Lochalsh and Skye Housing Association (LSHA) Is a large rural RSL, comprising of approximately 400 units. It has no dedicated procurement unit, no subsidiary organisations, and outsource housing maintenance and professional services. These services are contracted from the Local Authority and micro-businesses. 27. This RSL offers tenants advice on: rent payment, insurance, fire safety, neighbourhood disputes mediation services estate management issues rural home ownership grants and membership of the organisation. Advice requests are managed centrally from the head office in Portree and considered individually. The person requesting advice is referred to the organisation best suited to their needs. This method is feasible because the advice agencies in Skye are located in Portree, and there is a good communication network. It has not been deemed necessary to formalise these relationships. 28. LSHA initiated the Handy-person scheme which was established using Wider Role and NHS funding until 2003/04. It is now fully funded by the NHS and Social Work Department using mainstream funding. The scheme has two paid employees and operates over a large area assisting around 1000 people per year. Volunteers scope the problems initially to indicate to the handy-person what materials will be necessary to complete the work. The client pays for the materials, but they do not pay for the labour costs. This scheme has achieved total financial sustainability since its inception, and due to its success the idea is being considered by other RSLs across the Highlands and Islands. LSHA indicated that had there been a local organisation offering this service they would have outsourced to them, rather than creating their own scheme. 29. There was discussion around rural RSLs having to be aware of their small contractor base and fragile local economy, to ensure that all local contractors are afforded the opportunity to be viable. The contractors that do win contracts tend to be small and local (micro-businesses). Any professional services that are outsourced by the RSL are 7

12 in relation to management requirements, rather than for tenants, for example accountancy. 30. With a population of less than 13,000, businesses, including social economy organisations, need to be as innovative as possible in order to stay financially viable. LSHA s view was that many social economy organisations are too focussed on specific client groups or services to manage sustainability without recourse to grants. While there is enthusiasm for contracting with social economy organisations in the area, this limited flexibility can detract from their utility. The principles of Best Value as a consideration when selecting contractors are somewhat constricted in rural areas, given the limited contractor base. Case Study Kingdom Housing Association One of three RSLs forming Housing Association Regeneration Community Alliance (HARCA), along with Ore Valley and Glen Housing Associations. HARCA was established with the purpose of developing Wider Role activity within these RSLs. Kingdom appointed a Community Initiatives Officer, through Communities Scotland Wider Role funding. The Officer is responsible for the implementation and coordination of the Wider Role strategy for the three participating RSLs in order to ensure a joined-up approach. 32. When HARCA was established, a feasibility exercise was undertaken with the objective of identifying and outlining a number of options for: Contracting with existing social enterprises; Engaging with community-based groups that are not yet trading as social enterprises but which might have the potential to do so; Considering the establishment of new businesses where gaps exist in the market for goods and services. These businesses may trade as social enterprises. 33. This exercise produced a comprehensive picture of social enterprises already in Fife, and the considerations that RSLs must undertake when making procurement decisions, as well as a risk assessment of outsourcing to various social enterprises. 34. Kingdom s primary concern when procuring from contractors is that their tenants get value for money. They are keen to contract with social enterprises on the condition that the work that they do is of a high standard, completed on time, and is good value for money. 35. The activities that are currently being provided by social enterprises are environmental maintenance and recycling. For example: 36. FEAT Enterprises The Green Team, is the contractor responsible for facets of environmental maintenance, such as the maintenance of neighbourhood or communal greenspaces. Initially trading with Ore Valley Housing Association, they have now entered Green Team is seeking opportunities to diversify into related works such as stair cleaning, reactive maintenance and minor repairs. 37. Furniture Plus Limited is an established organisation that trades mainly through its two retail outlets. It has an informal agreement to provide furniture packages for young people through a voucher system, and also provides a house clearance service. However, it has not previously had the chance to demonstrate its effectiveness in providing services to the housing sector on a significant scale, 8

13 although Kingdom Housing Association is keen to expand on the relationship. With Furniture Plus only using furniture of a very high standard this results in a surplus that could also be recycled, which may lead to further market opportunities to explore. 38. Recycle Fife is a company established to provide recycling services close to source, and to raise awareness and educate the local community about environmental issues. It is Recycle Fife s ambition to supply every household and business in Fife with a receptacle for aluminium and steel cans and paper as part of a kerbside collection scheme. A pilot scheme has been agreed with Kingdom Housing Association and can recycling facilities established in a number of developments. If this scheme is as successful as the pilot indicates, expanding the can collection service could bring significant benefits in environmental terms for the communities involved. 39. Kingdom Housing Association is enthusiastic about making use of social enterprises when procuring services. Its involvement with HARCA has opened possible avenues for increased working with the social enterprise sector. The feasibility exercise has been acknowledged as very useful in forming a relationship between the three RSLs and social enterprises. 9

14 7 Subsidiary organisations 40. In order to map all RSLs and related organisations that outsource to social economy organisations, RSLs were asked whether they had subsidiary organisations, and if so, did their subsidiaries outsource services per cent of respondents (13 RSLs) have subsidiary organisations. Professional services are the most common use for subsidiary organisations with six of the 13 respondent s organisations having subsidiaries for this purpose. 42. Chart 3.5 illustrates services provided by subsidiary organisations: Chart % of RSLs Services for young people Environmental Maintenance Communtiy care workers Training and Employment Recycling Childcare Services for the elderly Housing Management Housing Maintenance Professional Services Advice Services Transport Services Services Provided by Subsidiaries *It should be noted that some subsidiaries will provide more than one service, therefore the percentages do not add to Of the 13 RSLs with subsidiary organisations, 11 outsource services. 44. Chart 3.6 shows to which organisations these subsidiaries outsource: 10

15 Chart % of RSLs Large Businesses Medium Businesses Small Businesses Micro Businesses Local Authority Other Public Sector Bodies Social Economy Organisations Organisations RSLs contract from *Some subsidiaries outsource to more than one organisation. 45. The following two case studies were selected because the RSLs have subsidiaries which are in different stages of maturity: Almond Housing Association has only recently taken on Almond Enterprise as a subsidiary; Hillcrest Housing Association is part of a group structure established ten years ago. These RSLs asserted that had there been an independent social enterprise in operation they would have been enthusiastic to have contracted services out to them. In Almond Housing Association s case, this was the situation, though they agreed to take it on as a subsidiary in order to ensure its future. Case Study Almond Housing Association Operates in West Lothian and has approximately 2,300 units spread around Livingston and beyond. It has no dedicated procurement unit, and its subsidiary is Almond Enterprise taken on in Almond Enterprise was established over 10 years ago by Livingston Development Corporation as a stair cleaning community business. The original volunteers retired and approached Almond Housing Association to take on their business, given that the RSL was their major client. At the time of the transfer there were eight paid employees on the company s books and the stair cleaning undertaken was for Almond Housing Association tenements and a few council owned tenements. Although there had been demand for more, the company chose to remain small. 48. The RSL committee discussed certain stipulations relating to its being incorporated: structure of the subsidiary would be arms length must be financially self-sustaining 11

16 should not interfere with or threaten the financial security of the RSL. 49. Subsequently the RSL Committee tendered the stair cleaning contract, and although there were other organisations that were priced more competitively, they were not based in the local community and did not have local knowledge. Almond Enterprise was awarded the contract on the basis of quality and benefits to the local community and transformed into a subsidiary of Almond Housing Association. 50. To help Almond Enterprise ensure sustainability, Almond Housing Association applied for, and received, Wider Role funding and hired a Social Enterprise Manager. The manager s role is to ensure that Almond Enterprise manages to remain a profitable trader that does not require additional help from the RSL to maintain its effectiveness. With the manager in place Almond Enterprise has: attracted new business through trading with other RSLs purchased a van and steam cleaner enabling them to carry out and attract more business improved its management and business strategy, making it more attractive as a trading body, and more effective in the quality of its work. A secondary function of the stair cleaning business has been to report building maintenance problems within the communal areas of the housing stock which has led to better communication between Almond Enterprise and Almond Housing Association. Case Study Hillcrest Housing Association Is a national RSL responsible for around 5,000 units in Edinburgh, Crieff, Dundee, Glenrothes and Arbroath. It has more established subsidiaries than Almond Housing Association and is structured differently. 52. The Hillcrest Group is not an individual company or legal entity, but a term for describing a group structure of companies. This is headed by the Hillcrest Housing Association, whose stated purpose is to improve the quality of life for individuals and foster community well-being. The core activities of the Hillcrest Group are housing, care and wider role. Hillcrest intends to make an integrated, holistic contribution to community well-being by combining and co-ordinating these activities. 53. All the subsidiaries in the Group exist to extend the range of activities compatible with the overarching aims and objectives of the parent, which is a registered Scottish charity. Surpluses made by subsidiaries are either covenanted back to Hillcrest HA or directed by it for social, community, or client purposes consistent with the core objectives. 54. Hillcrest Housing Association is the property owning parent in the Group which develops, owns, leases, and maintains all the property needs and provides a comprehensive range of corporate services such as Accounting, Finance and others. This allows Gowrie Care Limited, who employs 500 staff, focus purely on care and support services throughout Dundee, Angus, Fife, Perth & Kinross, Edinburgh and Glasgow. 12

17 55. Hillcrest Agency Services Limited allows the Group to offer agency services to other housing providers. It is a registered SQA training agency and manages the construction industry training and apprenticeship schemes established by the Group. 56. Hillcrest Enterprises Limited is a dormant company intended to be the vehicle for providing mid and market rent and outright, low cost, home ownership opportunities. The Hillcrest Group is keen to activate Hillcrest Enterprises In the course of their business Hillcrest outsource services, as does its subsidiaries, to mainly micro and small businesses. They currently outsource to a significant number of organisations, and have different contractors lists for different areas. At present they do not contract with other social enterprises or social economy organisations, though they do have a Social Enterprise Director who is responsible for the subsidiaries, which are also social enterprises. In discussion the director pointed out that there are few social enterprises in Dundee: Futurebuilders Scotland show 17 Investment Fund applications, and only one Seedcorn Fund application. 58. However, there is enthusiasm within the RSL and the subsidiary organisations to trade with social enterprises, although only on the grounds that the enterprise is capable of meeting quality standards, is financially sustainable, and is independent of grants for its economic viability. There are procurement procedures that must be adhered to, though social added value is taken into account when considering a contract. 1 Official description provided by Hillcrest HA 13

18 8 Procurement 59. Of all the survey respondents, five had dedicated procurement units (7 per cent), and each of these fell into the Large Urban, Large Rural, or National classification. 60. Chart 3.7 corresponds to the question on the survey that relates to elements RSLs consider when procuring services. Chart Level of importance Previous relevant experience understanding specific client groups Established links with commuity Ability to deploy suitable resources Adherence to acceptable code of professional conduct Innovative ability Whole-life Value Social Added Value Value for money * It should be noted that these results are subjective and reflect the diversity of procurement practices within RSLs. 61. All of the elements were considered important, however, the results show that the only overwhelming factor was 48 of the 72 RSLs said value for money was the most important factor in procurement when considering contracts. The remainder of the categories were less uniform, and while demonstrating some consistencies they cannot be used to inform any robust conclusions. Social Added Value was rated the least important factor in considering who to outsource to. Case Study Glasgow Housing Association (GHA) The largest RSL in the UK having 67,000 units at the time of writing. GHA was chosen as a case study area because it has a dedicated procurement unit. 63. Given its size GHA is an influential procurer of services and for the purpose of this research it was important to know how it made use of its financial power. The RSL is aware of its potential to promote community regeneration and rates Social Added Value as an important aspect in procurement. The others being: 1. value for money 2. ability to deploy suitable resources 3. previous relevant experience. 14

19 4. social added value 5. established links with the community. In the majority of the rest of the survey responses, Social Added Value and established links with the community have seldom made the list. 64. GHA has recently included a Community Benefits clause in contracts that go to tender which incorporates key performance indicators (KPIs) which are measured regularly. Additionally, contracts tend to be either three or five years in duration, and carry the caveat that if not all targets and conditions are met, the contract can be terminated. Social Added Value considerations are inherent in some of the targets and conditions. 65. Due to the number of units GHA is responsible for and the size of its contracts, it has little experience of working with smaller social economy organisations and tends to contract with large private sector organisations. When considering contracts, even with the social clauses now added into their contracts, value for money is still the initial consideration as the Procurement Unit must be able to justify their selections on that basis. 66. GHA procures centrally for the Local Housing Offices (LHOs), though procurement is based on consultations and recommendations from LHOs. There is the possibility that future procurement practices may be decentralised. 67. The scale of services contracted out by GHA means that businesses must have the necessary legal structures and insurance in order to be considered for tender. As a result, small, and even medium sized social enterprises, may not be able to contract with GHA due to concerns about their stability. One social enterprise that has a large enough capacity and is currently working with the GHA under a Service Level Agreement (SLA) is the Wise Group. This is a charitable organisation dedicated to helping unemployed people back into work, by preparing them for the job market through an innovative mix of training, personal development and paid work experience. GHA is currently in the process of large scale demolition and construction of its housing stock, the Wise Group is in a position to take advantage of this opportunity. However their SLA is due for review, and the contract will be put out to tender. 68. As with all of the RSLs interviewed for case studies, GHA is very aware of competing on the open market and is concerned with issues of transparency. All contracts tend to be over the value that requires advertising in the Official Journal of the European Union (OJEU). Case Study Abbeyfields and small rural RSLs The ethos behind Abbeyfield Societies is to provide accommodation for elderly people often comprising of one or two large houses in which tenants have their own room and share communal areas. 70. Abbeyfield Black Isle does not offer highly supported accommodation, though there is a housekeeper who lives in the property and prepares meals for residents. It is a single house with the capacity for seven beds, and as such there is not a huge demand for maintenance in comparison with the other case study RSLs. They have well established links within the local community, and attempt to employ the same contractors in order to ensure continuity and accountability.rather than large organisations nearby in Inverness. They feel that this is justifiable given that they do not have the need to buy in bulk or the capacity to assure long term service level 15

20 agreements. The Abbeyfield has found the upturn in the building industry is having adverse effects on small RSLs due to the increasing demand for contractors, making it hard to secure quotes and pin down trades-people. 71. Abbeyfield Scotland aims to provide an efficient, cost-effective and user-friendly maintenance service for ongoing repairs, replacements and improvements. To this effect the society has compiled a maintenance manual, which is used by the committee members as reference. In the same way that larger RSL have to have tenant approval, residents will be encouraged to speak up if they are unhappy with the speed or quality of the repairs, or the behaviour of contractors. It is important to know if the repairs service is falling short of required standards. As well as consultation prior to the work being carried out, consultation on completion is a society requirement. 16

21 9 Barriers 72. A significant number of barriers to contracting with social economy organisations was not identified by the RSLs who took part in the case studies, however the obstacles that were noted are important. Some of those were: Value for money: this is RSLs main concern. It is their duty to tenants to ensure the services procured are good value for money in every aspect, and that whichever company is selected to carry out a contract has the facilities and experience to carry it through to its completion. The Commissioners Guide (Appendix 2) produced by Communities Scotland may be helpful in encouraging RSLs to consider measurable benefits when procuring from social enterprises and help RSLs justify procurement decisions. Quality of service: two out of the six case studies gave examples of contracts that had been given to social enterprises which had to be re-tendered due to the poor quality of service. There had also been issues regarding the professionalism and reliability of the service. Dependability: New social enterprises may not be able to cope with the amount of work that is required, and buying in bulk may be easier for a private business with capital than a small or even medium sized social enterprise. It would be detrimental to all involved should a contract collapse prior to completion, and RSLs need to ensure that this does not happen as they cannot be seen to be risking tenants money. 73. This research has found that RSLs will consider contracting to social enterprises, though the larger the RSL, the more important it is that the social enterprise is well established and can be held to account if necessary. The idea of contracting to smaller organisations in the social economy that are not financially self-sustaining is deemed as being too high risk. 17

22 10 Issues for the expansion of the sector 74. RSLs understand why they are seen as useful organisations to foster social enterprise, especially as they consider themselves to be successful social enterprises themselves. However it should be appreciated that one of the factors in their success is the regulatory regime which ensures careful procurement and minimal risk taking. They are also responsible to their tenants and any procurement decisions must be justifiable, hence the importance of value for money. 75. Loan funding for social enterprise was regarded with real enthusiasm by the RSLs as it was thought that this would encourage business-like behaviour giving RSLs more confidence in trading with them. Communities Scotland supports Social Investment Scotland which offers loans to social economy organisations, and other potential loan providers including high street banks, Unity Trust Bank, Charity Bank and local Community Development Finance Initiatives. 76. Innovative initiatives were mentioned frequently by RSLs as a way into trading. For example: Highland RSLs have been investigating renewable energy as a possible avenue for exploration, and there is work in the Highland and Islands to promote this type of community enterprise. The newly founded Highland Housing Alliance (which has been co-established by RSLs in the Highlands to build housing on land bought from the council) are enthusiastic advocates of renewable energy. 77. There appears to be real benefit in RSLs working together when procuring, for social economy organisations to work in partnership, in order to share knowledge, experience and expertise. For example: Almond Enterprises is interested in contact with the local furniture re-cycling project, as they now have a van, and Almond Housing Association spends a significant amount of money on void clearance. Hillcrest Housing Association also have aspirations to work with furniture re-cycling projects in the future (Tayside Furniture Project) again with regards to void clearance and furnishing tenancies, and Kingdom Housing Association have already started to do this. It could prove useful to share knowledge and experience. 18

23 11 Conclusion 78. The research was focussed around key issues investigated through a postal survey and case study interviews. 79. Areas of interest were: How many RSLs outsourced services? How many outsourced to social enterprises? How many RSLs had subsidiaries, and for what service areas? Differences between urban and rural localities Differences between large and small RSLs Barriers to trading with Social Enterprise Future recommendations for Social Enterprise. 80. Outsourced services - 72 survey respondents - 40 outsourced services. (Chart 3.2) Lochalsh and Skye Housing Association outsource services to local micro-businesses and the local authority. The RSL highlighted: indication of significant expansion of social economy sector due to number applying for Futurebuilders Scotland Seedcorn funding in the Highlands organisations focussing on delivering single service limiting opportunity to trade with RSLs financially sustainable organisations better in the long run because RSLs show that they will not consider trading with organisations that rely on grant funding. 81. Outsourcing to social enterprises - 40 outsource services 18 outsource to social economy organisations. (Chart 3.3) Advice services most popular outsourced. Housing Association Regeneration Community Alliance (HARCA), commissioned a feasibility st associated risk of trading with various organisations. Being part of the Alliance also gives them the opportunity to utilise the experiences and expertise of other RSLs which are part of the group. 82. RSL subsidiaries - 13 RSLs have subsidiary organisations which they have set up to carry out particular tasks at arms length of the parent company. The most common service provided by subsidiaries is professional services. Almond Housing Association and Hillcrest Housing Association said they would have contracted service from a fully operational social enterprise in their area instead of provided by subsidiaries had they been available. 84. Differences between urban and rural localities Large urban RSLs more opportunity to procure with social enterprises in their area and have enough business to help social enterprises off the ground and allow for sustainability. Rural areas (Lochalsh and Skye Housing Association) there is a delicate local economy which impacts on how RSLs engage with the social economy sector. 85. Differences between large and small RSLs Very large urban RSLs (Glasgow Housing Association) issue of whether small or medium sized social enterprise can offer the security and accountability demanded by contracting procedures and tenants. 19

24 Unlikely that a newly established social enterprise would have the mechanisms in place to deal effectively with the demands of large contracts. Abbeyfield Black Isle would rather trade with local trades-people as they value the personal relationship with their contractors. Medium-sized RSLs, such as Hillcrest, Almond and Kingdom most likely to outsource services to the social economy sector as they are small enough to be able to offer support, but large enough to recover if the project is not a success. 86. Barriers to trading with social enterprise RSL said they would only trade with self-sustaining social enterprises although were enthusiastic to trade with social enterprises and aware of the benefits in doing so. Priority must be value for money. A persistent problem unsure of funding streams that they can apply for. The consensus was that the Futurebuilders Scotland funding programme and Wider Role funding were very closely connected and that a rationalisation of the two funds to bring them together should be considered. The procurement of services by RSLs appears to actively reinforce the ultimate objectives of Futurebuilders Scotland funding. RSLs must adhere to procurement rules and be capable of justifying any procurement decisions made. 87. Future recommendations for social enterprise Encouragment of innovative ideas from new organisations as a way of competing with well established organisations. Social economy organisations could exploit further was in the added value that they bring to projects and quantify this when tendering for contracts through the Guide to Social Added Value 2 which has been produced through Communities Scotland should assist this process. Sharing knowledge and expertise is also crucial for the growth of the sector

25 12 Sources Department of Trade and Industry Social Enterprise: a strategy for success 3, July 2002 Social Enterprise Harris, Donna; Marshall, Dawn, The wider role of housing associations: further evidence 4 (Sector study 43), Housing Corporation, 149 Tottenham Court Road, London W1P 0BN, 2005 Jude Payne & Ross Burnside The Social Economy in Scotland 5, SPICe briefing, 30 July 2003 Regulation & Inspection, Communities Scotland Scottish Registered Social Landlord Statistics , Scottish Council of Voluntary Organisations (SCVO) Website 6, March 2006 Scottish Executive A review of the Scottish Executive s Policies to promote the Social Economy 7 January Scottish Executive & Communities Scotland Policy Statement Regenerating Communities:The role of registered social landlords September Scottish Executive Futurebuilders Scotland: Investing in the Social Economy Scottish Executive, St Andrew s House, Edinburgh, September 2004, Figure 1 9 Scottish Federation of Housing Associations (SFHA) Website, March Scottish Federation of Housing Associations and Scottish Homes (now Communities Scotland) Performance Standards for Registered Social Landlords April SQW Limited, Economic Development Consultants Assessment of the Social Economy of the Highlands and Islands. A Final Report to: Highlands and Islands Enterprise. March Paul Zealy Fife Social Economy Partnership, August Page

26 Appendix 1 Glossary of terms Social economy There are many definitions of the sector, and for the purpose of this report the wide definition was employed, as used by the Scottish Executive: Social Economy encompasses the wide range of activity from purely philanthropic to organisations which trade to advance their social objectives, all with people centred, participative and democratic values. Social economy organisations have in common a sense of social purpose and functions which include economic activity. But in other respects they are as diverse as organisations in the public or private sectors. Some are fully-fledged businesses, entrepreneurially inspired and driven, and may have more in common with private sector businesses than with some other social economy organisations. (A review of the Scottish Executive's Policies to Promote the Social Economy, page 13) 13 All social economy organisations have as distinguishing features: their independence from the state, their commitment to public benefit, their unpaid volunteer leadership, and the fact that they reinvest any surplus they make all factors which can bring added value to public service markets. (A review of the Scottish Executive's Policies to Promote the Social Economy, page 18). There are around 50,000 voluntary organisations and groups operating in Scotland. The sector is a formidable force for delivering services and for creating change at the local level. (SCVO website, March 2006). 14 Social Enterprises The Department of Trade and Industry (DTI) asserts that: A social enterprise is a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business of in the community, rather than being driven by the need to maximise profit for the shareholders and owners. (Social Enterprise: a strategy for success). 15 A more detailed definition is provided by the Fife Social Economy Partnership in their Protocol document: Social Enterprises are competitive businesses, owned and trading for a social purpose. They seek to survive as businesses by establishing a market share and making a profit. Social Enterprises combine the need to be successful businesses with social aims. They emphasise the long-term benefits for employees, consumers and the community. The main characteristics of organisations in this sector are: Non-profit distributing; Engaging in trading activities to achieve a social purpose; Holding assets and wealth in trust for community benefit; and Democratic structures controlled by voluntary /community representatives. The DTI, when estimating numbers of social enterprises uses a definition of them being registered companies limited by guarantee and industrial and provident societies operating 13 hhtp://www/scotland.gov.uk/publications/2003/01/16206/

27 under certain Standard Industrial Classifications. They used a trading income figure of 25 per cent or greater to include aspiring social enterprises. There are approximately 1,100 social enterprises active in Scotland. The key areas of trading activity are: o Health and Social Work 29 per cent o Business Services 26 per cent o Education 16 per cent o Community, social and personal services 14 per cent o Wholesale/retail 5 per cent o Other 10 per cent Source Small Business Service: Survey of social enterprises across the UK Housing Associations and Registered Social Landlords (RSLs) A housing association is a non profit making organisation committed to meeting specific housing needs. Housing associations are run by committees of volunteers elected by the tenants. The committee employs professional staff to manage the properties. Registered Social Landlords (RSLs) are independent housing organisations registered with Communities Scotland under the Housing(Scotland) Act This means that the Housing Association meets the required standard of housing as established by the Scottish Executive. It is estimated that RSLs provide a vital service to around 12 per cent of the population of Scotland, and it is a growing sector. (SFHA Website, March 2006) 16 RSLs are encouraged to consider how they could best utilise their skills, experience and resources to fulfil their potential to improve the quality of life for people in Scotland. (Regenerating Communities) 17. Other key features which make RSLs extremely attractive as organisations who can have a positive impact on community regeneration include: o o o o o o RSLs own assets They have secure revenue streams They often have very strong links to communities, both of place and interest They have professional staff The are regulated They have an impressive track record as businesses. In England the proportion of RSLs involved in non-social housing activities has increased form 8 per cent in 2002 to 15 per cent in 2003, and nearly half of these also provide other non-housing activities and services. (The Wider Role of Housing Associations,) page 5) 18. Abbeyfield Societies According to the Regulation and Inspection 2003/04 Scottish Registered Social Landlord Statistics, 57 Abbeyfields were registered with Communities Scotland. Most Abbeyfield Societies own one or two houses, each providing about 10 to 15 bed spaces to elderly residents. Collectively all Abbeyfield Societies provide approximately 700 bed spaces, and

28 Wider Role access is open to anyone aged over 60. Most Abbeyfield tenants have occupancy or tenancy agreements in place. (Regulation and Inspection 2003/04 Scottish Registered Social Landlord Statistics, page 34). Wider Role Policy, developed by Scottish Homes, and now being taken forward by Communities Scotland, seeks to encourage RSLs to take a proactive role in regenerating Scottish neighbourhoods. Wider Role is about activity that RSLs are involved in that goes beyond the provision, improvement and management of housing with the aim of improving the economic, social and environmental circumstances of the communities within which RSLs operate. (Regenerating Communities). The Annual Performance & Statistical Return (APSR ), published by the Regulation and Inspection Division in Communities Scotland, defines non-core activities and wider role as follows: Non-core activities are services and activities that are not directly related to the management, maintenance and development of your fully-owned housing stock, or care and related services for tenants of owned and leased or managed stock. Providing non-core services would not generally be paid for from rent and service charges. Examples of non-core activities include: management services for other organisations; factoring services; alarm service for sheltered units; wider action; and care and repair. The term wider action (or wider role) means activities undertaken by RSLs, in addition to the provision and management of social housing, to build sustainable communities. This includes activities which aim to tackle economic and social exclusion and to improve the economic, social and environmental circumstances of the communities in which RSLs work. There are a number of ways in which a RSL can be involved in Wider Role activity: RSL as a direct provider of a service RSL creates arms length organisation to deliver service RSL employs another voluntary organisation to provide the service RSL supports another voluntary organisation to provide the service. There are a significant number of RSLs which have established subsidiaries in order to deliver wider role services. The Housing (Scotland) Act 2001 Part 3, Regulation of Social Landlords, Chapter 4, Interpretation of Part 3, Meaning of subsidiary and associate (1) In this Part subsidiary, in relation to a registered social landlord, means a company with respect to which one of the following conditions is fulfilled (a) the landlord is a member of the company and controls the composition of the board of directors, (b) The landlord holds more than half in nominal value of the company s equity share capital (c) the company is a subsidiary, within the meaning of the Companies Act 1985 or the Friendly and Industrial and Provident Societies Act 1968, of another company which, by virtue of paragraph (a) or (b), is itself a subsidiary of the landlord. When an RSL is planning its Wider Role activity, Communities Scotland encourages it to consider how it will impact upon: Improving health Increasing educational attainment Improving levels of community safety, including reducing levels of anti-social behaviour 24