Matt Smith: A new spirit of enterprise that means people will profit

From one side, the North is a vibrant place to be with an economy worth nearly £300bn, according to the recent report by the Institute of Public Policy. If this is true, it’s the 10th largest economy in Europe. So is it a Powerhouse already?

It might feel this way in the smart city centre cafés of Leeds but it’s not the reality for a number of communities not too far from the latté-drinkers.

There’s a very different reality, where the challenge of struggling industries, unemployment and social problems are leading to the continuing decline of once proud communities.

Eighteen years ago, The Full Monty was released, telling the story of six unemployed steelworkers forced to form a male striptease act to make some money. With news of Redcar steelworks being mothballed it brings back memories of the 1980s and 90s.

There are a lot of contrary figures around the state of the North’s health. And a lot of talk about its future. As Elvis said, a little less conversation a little more action please – as many continue to debate, action defines us. Well, at the Key Fund, we’ve been acting since 1999. Based in Sheffield, we set out to revitalise Northern communities decimated by the collapse of coal and steel with our pioneering loan fund to support the development of social enterprises.

We are enabling a new Northern revolution, from the bottom up, where enterprises put people before profits with support from the Government, the EU, the Big Lottery, and other funds.

To date, we’ve invested £40m in the North; every £1 we invest creates an £8 wider return to that local community.

What’s more, we only invest in people who have been turned down by mainstream finance; around 80 per cent operate in areas of multiple disadvantage.

Social enterprise works in these areas, where there’s a cost to doing nothing: a cost to the taxpayer, the state and society.

Let’s take the health sector. There was a recent story about a pharmaceuticals CEO who initially raised a HIV drug price by 5,000 per cent. Wouldn’t you rather buy from a social enterprise model that’s not for profit, rather than a business that makes profit from suffering? The reality is that when you buy from a social enterprise, society profits.

Our sector is ripe for making the most of spun-out health services. Based at the University of Sheffield, Nine Health helps patients, the public, health professionals, academics and companies to deliver innovative technology-based products and services. The Key Fund invested £30,000 to start a project using supercomputers to model disease treatments to save lives and eliminate suffering.

What about sports facilities? The Government has pledged to ensure two hours of sport per week.

As well as skateboarding, gyms, and a climbing wall, the Works Skatepark in Leeds launched an education centre for young people disaffected with mainstream education.

Typically, like many social enterprises, it’s led by an entrepreneur with a big heart – Elliott Turnbull. He was inspired to help young people after he got tired of having to turn them away from the skate park because they couldn’t afford the facilities.

Elliott also runs apprenticeships – helping disadvantaged youth gain skills and jobs from joiners to care home workers. He set this up after his daughter died at birth. “The reason I can get out of bed in the morning,” said Elliott, “is just because I decided I was in a position to give to other children the opportunity my daughter never got.”

After three years of Key Fund supporting his enterprise, he now has a £1m turnover. Wouldn’t you rather “buy” from Elliott?

There are 70,000 social enterprises in the UK, contributing £24bn to the economy and employing nearly a million people. A third of all SMEs are now social enterprises. Innovative, heartfelt, bolstering our communities, they are not reliant on grants or donations. They are autonomous, independent and sustainable; reinvesting profits back into their social mission.

Social enterprises create local employment and supply chains. Services tailored to local needs are more effective. Engaging those on the edges, the disabled, young people not in employment or education, or the long-term unemployed has huge, multiple social impacts, from less anti-social behaviour to diverting at-risk people from the criminal justice system. It all benefits society and saves the public purse.

The point being, it works. Brilliantly. And we are putting the North at the forefront of this movement.

That’s why we are supporting Social Saturday, a nationwide event tomorrow. Its aim is to encourage people to “Buy Social”.

It’s part of a turning tide, where more and more people want to shop locally, ethically and socially... go on, buy something that really means something.

Matt Smith is Deputy CEO of the Key Fund, the Sheffield-based social enterprise investor.