SSE hearing 120425

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Parliament debate on social and solidarity economy

By Toby Johnson

Green MEP Sven Giegold is about to present a programme for the social and solidarity economy to his party for approval. He gave it an airing during European Co-operative Week. The main issues of concern are discrimination against co-operative businesses and the threat to their identity.

On 25th April 2012, as part of European Co-operatives Week, Green MEP Sven Giegold organised a hearing at the European Parliament to discuss his draft position paper The Social and Solidarity Economy in Europe. A Green Programme Beyond the Crisis.

The proposal calls for a co-ordinated policy on the part of the Commission – mirrored by a stronger representative organisation. This would facilitate the full recognition of the social and solidarity economy (SSE) in such areas as statistics and legal statutes, ensuring a level playing field in areas such as banking. He believes the regional policy should pay more attention, and that member states and regions should use the open method of co-ordination to exchange best practice on supporting the SSE. He also aims to tackle issues of state aid, agriculture, fair trade and energy.

Contents

Social business as a lever of growth

The star speaker was Michel Barnier, Commissioner for the Internal Market, who confessed that the topic of social entrepreneurship is new both for the Commission and for him personally. Nevertheless it is far from being marginal and has place in the growth agenda that Europe has to build. He has continued the work of his predecessor Mario Monti in analysing the strengths and weaknesses of the single market, and identified 12 ‘levers of growth’ – of which social business is one. The Social Business Initiative that has been developed consists of work in three areas: finance, visibility and the legal framework. One piece of work that has already been completed is to reduce the sometimes considerable costs of bidding for public contracts. The proposal is that in future, all bidders will not be obliged to incur the sometimes heavy costs of providing full information – instead only the winner will have to do this. Among the tools to raise the visibility of social enterprise are a mapping of the sector and a multilingual communication platform with electronic translation.

Discrimination against the co-operative business model

Bob Cannell from the UK’s largest collectively-run worker co-operative, the 150-strong Suma Wholefoods of Elland in Yorkshire, described some of the difficulties of operating solidarity-based businesses in what he described as a fundamentally capitalist country where economic democracy and collective ownership are seen as very strange indeed. He gave four instances of discrimination against co-operatives:

  • The Financial Services Authority has ruled that the Co-operative Bank is unfit to take over 632 branches of the indebted Lloyd’s Bank, apparently because its board contains ordinary people rather than professional bankers. Yet it is notable that the Co-op Bank has come through the financial crisis unscathed, precisely because it has avoided the risky behaviour of capitalist banks;
  • Energy4All, which has promoted seven consumer-owned co-operative windfarms, was refused city finance because the financers do not understand the co-operative model;
  • Football Club United of Manchester (a supporters’ co-operative set up in protest when Manchester United Football Club was subject to a hostile takeover) has been excluded from joining the Football League, as it does not recognise the co-operative as a suitable form – yet major European clubs like Barcelona are co-operatives;
  • 200 schools have chosen to become co-operatives, yet the Department of Education does not recognise that form.

The co-operative movement has therefore taken the self-help route. Ironically, since the closure of the Business Links advice service, it is now the co-operative movement which operates Britain’s only national advice service for business start-ups, the Co-operative Enterprise Hub.

Emmanuel Vallens from the Internal Market DG, the policy co-ordinator of the Social Business Initiative, urged that the Commission could only act on such apparent examples of discrimination if people provide it with concrete examples.

Not just another asset class

Bruno Dunkel explained how CoopEst has brought together 78 financial institutions in seven countries to create a combined investment capacity of €33m. By pooling its members’ resources, it has leveraged in equity investment from the World Bank and the European Investment Fund. The investors’ attitude has evolved over time: five years ago the World Bank invested as a matter of corporate social responsibility, whereas today it cites CoopEst as a best practice in social economy banking. The idea that investors should treat social enterprises as another ‘asset class’ brings with it three risks, Mr Dunkel said. First, it would tend to concentrate investment in large enterprises. Secondly, it might create an unwelcome price bubble. Thirdly, it would be likely to lead to mission drift, and to a dilution of the sector’s values.

Apostolos Ioakimidis of the Enterprise DG paid tribute to CoopEst in an amusing intervention, in which he noted that the Commission had supported the feasibility study that led to CoopEst being set up. His pride was coupled with regret that it had not invested in a fund which had been so profitable!

Mr Dunkel sees two priorities: filling the gaps in loan provision between €25,000 and €350,000, and providing guarantees. He also proposes that the notion of social impact should be included in the regulatory framework, and that tax exemptions might be linked to social performance.

Replying to a speaker from the European Association of Co-operative Banks, who mentioned the impossibility of establishing a co-operative bank in Slovenia, Mr Giegold said that the Greens have asked for small credit co-operatives to be exempted from the provision of ‘CRD4’, the revised Capital Requirements Directive.

Toby Johnson from AEIDL mentioned that many national programmes supporting entrepreneurship discriminate explicitly against collective entrepreneurship, for instance Germany’s Ich AG and Mikrokreditfonds Deutschland.

Decentralise the Structural Funds

Jan Olsson, chair of REVES, the European Network of Cities and Regions for the Social Economy, said that what is needed is partnerships at the local level. He strongly supported the Green proposal to use the Open Method of Co-ordination to share good practice on promoting the social economy. But, he said, it should come from the bottom up, through a decentralisation of the Structural Funds using mechanisms such as global grants, pacts and local development plans. The social economy is about people, and relies on what in German is called Bildung – involving empowerment, mobilisation and participative education. A social lifecycle assessment is needed.

Toby Johnson pointed to the importance of the ESF in supporting the social economy, and felt that it merited lengthier mention in the Greens’ paper. In particular he mentioned the Better Future for the Social Economy (BFSE) network which involves seven ESF managing authorities under the leadership of Poland. It has been working on five key topics: social franchising, finance, measuring social value, public procurement and state aid & public-social partnerships. It will be holding its final conference in Brussels on Tuesday 26th June. Moreover, the social economy and social enterprises is one of the 18 investment priorities for the Structural Funds in the 2014-2020 programming period.

Dorotea Daniele, BFSE’s facilitator commented that the sooner the SBI’s promised information exchange platform is launched the better. Commissioner Barnier said that studies were under way and the launch could be expected in 2013.

Differences over definitions

Eric Lavillunière from Luxembourg commented that the issue of definitions was still alive, and that ‘social business’ and the social and solidarity economy are not to be elided. This echoed Bob Cannell's comment that in the UK ‘social enterprise’ means something very different from social economy – in particular as regards democracy. The government is using the concept as a way to hive off as much of the public sector as it can. It is using terms such as co-operative and social enterprise wrongly, to refer to companies that are majority owned by venture capitalists and have a minority employee stake.

The strongest dissenting voice came from Filippo Addarii of the Euclid network, who, having admitted that he did not want to be popular, pointed out that the picture of the social economy is not a rosy as it might seem. The real figures need to be taken into account. At a time when public spending is being cut, social enterprises need to attract private investors, and therefore need to make profits.

Conclusion

Summing up, Sven Giegold proposed two principles as fundamental:

  • doing business and seeking profit, but applying it to other objectives
  • ownership not for individual benefit

He felt that the inability of the social and solidarity economy to work together could not be put down just to diversity. He urged its supporters to practice co-operative principles rather than over-emphasising issues of definition. Having thus subjected his draft paper to criticism from social economy actors, he invited further comments within two weeks. The paper will then be proposed for adoption by the Greens-European Free Alliance.

References

Summary of draft position paper: http://www.socialeconomy.eu.org/IMG/pdf/green_position_social-solidarity_economy_final-2.pdf

Contact: mailto://sven.giegold@europarl.europa.eu