Brexit, Co-ops and Social Enterprise – what next?

For those working in businesses seeking to achieve social aims, whether in the community sector, co-ops and mutuals, or social enterprises, the Brexit outcome creates some profound uncertainties – but there may also be some opportunities.

Leadership

You will need all your resilience and flexibility over the coming months. As we have pointed out in our briefing for Charities on Brexit, the campaign has had a bruising and divisive effect on communities. Third-sector organisations and social enterprises have a very significant role in rebuilding trust and supporting resilience across the country. Those of you who seek to involve people in your governance or your organisation need to keep doing what you’re doing – we have been very struck by the way so many people feel disempowered and divorced from the political process.

Devaluations

The development implications for devaluation may well impact on those clients involved in building schemes, particularly community-led housing. House builders are already feeling the impact, and this will feed through into the wider marketplace, leading to schemes taking longer to develop. There may also be indirect impact if, for example, there is an increase in borrowing for the public sector from the Public Works Loan Board (PWLB) – we have a number of clients from the community sector developing schemes, working with their local authority, which are part funded by the PWLB.  Costs of these schemes may increase to the point where they are no longer viable.

Change of sentiment

This is probably a much bigger issue than it might first appear.  The long term impact of Brexit on EU funded programmes may start to “bite” sooner than you think – just by way of example, we have recently advised a number of third sector organisations involved in the second stage of bidding into the Building Better Opportunities Fund, a European Social Fund (ESF) backed programme run by the Big Lottery Fund.This is programmed to run until 2020. Will it? We are supporting a community organisation working with their local authority on a phased, 10 year building project to be part funded by ESF money. The project is due to start on site next year.  Will it go ahead? At the moment, we simply don’t know what the future of European funding programmes might be, and the swiftly changing position of the “leave” campaign on funding commitments is not promising.

Government policy change

If there is indeed a shift in policy, it is likely to be a shift to a more right-wing agenda, given the position of much of the “leave” camp. We have already seen the indirect impacts of public sector reforms on, for example, tenant management organisations and other community-led housing projects, dealing with the fallout of the social housing rent reduction. If there is an economic impact of Brexit, then there are likely to be further cuts in public spending in response.

However (and more hopefully), there may be the opportunity for some careful and realistic thinking around the State Aid rules, and other regulatory matters that emanate from the EU. Certainly a number of our contacts are gearing up for some energetic lobbying!

In conclusion, there will be no substitute for watching developments carefully. Do keep in close contact with your normal ACS contact, and involve us in conversations where we can support you.