May 16, 2018 / 6:28 PM / 9 months ago

Britain to invest in ethical, local businesses to heal Brexit wounds

LONDON (Thomson Reuters Foundation) - Britain must invest more in local organisations delivering public services to heal a divided, post-Brexit society, the culture minister said on Wednesday, outlining plans to boost government spending on businesses with a social mission.

FILE PHOTO: Britain's Secretary of State for Digital, Culture, Media and Sport Matt Hancock leaves 10 Downing Street with a new refillable coffee cup in London, January 16, 2018. REUTERS/Hannah McKay

The government wants to increase small and ethical businesses’ share of some 45 billion pounds ($61 billion) it spends each year on goods and services, currently dominated by a handful of large firms.

“We know the vote to leave the EU was itself the outcome of a divided society,” Matt Hancock said at a briefing, referring to the 2016 decision to leave the European Union.

“Deliberate action is required to help people take back control, not just of our national borders or our global trade, but of their own communities.”

Hancock’s Department for Digital, Culture, Media and Sport is preparing to launch a strategy to support charities and other civil society groups, which have been hit by cuts to public services aimed at reducing Britain’s budget deficit.

Britain is seen as a global leader in the innovative social enterprise sector, with about 70,000 ethical businesses employing nearly 1 million people, according to Social Enterprise UK, which represents the growing sector.

The government has backed social enterprises, for example with a 2012 law that encourages government procurement officers to consider the social and environmental impact of contracts they award rather than just going with the lowest bid.

The law led Sunderland Council in northern England to sign a contract with Station Taxis, which supports drivers that it works with to take maths and English courses, a government review found.

It also helped another social enterprise, London Early Years Foundation Nursery, win a contract to provide childcare for parliamentarians’ children, using its profits to offer almost half of its nursery places for free.

Hancock said his department is exploring how to ensure the law delivers on “its revolutionary promise” which has not yet been met.

Only 11 percent of local authorities consulted mentioned the law in their procurement strategy, the 2015 review said.

“I believe strongly in business as a force for good,” Hancock said. “We need business to adapt to a new, more empowered, more values-driven age.”

The government will also invest more in social impact bonds, also known as pay-for-performance contracts, which funnel private capital into social projects usually funded by governments and charities, Hancock said.

($1 = 0.7410 pounds)

Reporting by Lee Mannion @leemannion, Editing Katy Migiro. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's rights, trafficking, property rights, climate change and resilience. Visit

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