Posted by: socialtraders | February 8, 2010

GDP and the growth of Social Enterprise

Peter Holbrook, Social Enterprise Coalition’s new CEO wants to see the contribution of social enterprise to GDP in the UK to grow from 1% to 3% by 2020 The vision for growth was unveiled during the opening speech at the annual conference of the SEC, Voice 10, that took place in Cardiff 1-2 February. This ambitious goal was set out against the backdrop of a showcase launch of the new national Social Enterprise Mark to be awarded to social entereprises that meet the criteria.

Government research carried out for the Department of Business, Enterprise and Regulatory Reform (BERR) shows the social enterprise sector represents 62,000 businesses, employing 800,000 people with a combined turnover of £24 billion. On the face of it these figures are very impressive but do we represent an industry in which on average every single social enterprise in the UK employs 13 people and enjoys a turnover on £.387m? And what of GDP? The Cabinet Office reporteds the sector’s contribution to the UK’s GDP to be £8.4 billion based on the 2005 Small Business Survey (BERR).

As economists will explain Gross Domestic Product (GDP) is an economic calculation – the total market value a nation’s goods and services each year. The GDP formula is as follows: Private Consumption plus Gross Investment and Government Spending along with Exports less Imports. In order to validate the maths and processes three financial institutions publish the figures in US dollars; the International Monetary Fund, the World Bank and the US Central Intelligence Agency. In 2008 GDP in the United Kingdom amounted to $2.68trillion (IMF) thats £1.71 trillion. So first let’s looks at the maths, based on the 2008 figure 1% of GDP would have been £17.1 billion bringing a threefold increase within 10 years to well over £50 billion!

Promotors of the Social Enterprise Mark are making comparison to the growing strength of the FairTrade Mark which according to the FairTrade Foundation is now recognised by 7 out of 10 people as compared with only 1 in 5 eight years ago. However for all the marketing and promotion the value of sales within the UK was £712.6m in 2008, around 10% of the social enterprise sector! I believe we can learn much from the 25 years plus experience of our FairTrade colleagues who have developed the mark and the market on a global basis.

I want our social enterprise baseline to be validated. I ask the Social Enterprise Coalition to invite independant research to scrutinise the statistics, to ensure transparency in our aspirational claims on GDP and to establish a reliable economic measurement tool for the future. Finally I would like SEC to publish the findings in an economic report at the Voice11 conference.

Any thoughts on this?

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