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How Can We Externalise Our Project From The Local Authority? Are There Any Examples Of When This Has Been Done Successfully?

In terms of externalising work projects or Social Firms from public authority backgrounds, there aren’t many examples yet of this happening. Social Firms UK ran an Invest to Save project a few years ago which might be of use.

Two guides have been produced which should also be of use:
- "Bringing Social Firms Out Of Public Authorities" (£60 to non-members of Social Firms UK and £30 to members)

- "A Guide To Charities Starting Social Firms" (£40 to non-members of Social Firms UK and £20 to members)

For more information and to download sample pages of these documents, visit our news page: http://www.socialfirms.co.uk/news/index.php/Item243.html

Social Firms UK is able to provide consultancy on externalising Social Firms from public authority control. Examples of where this has worked is Travel Matters, which came out of an NHS Trust in Surrey in June 2006 (www.travelmattersuk.com), Netherne Printing Services, which came out of the same NHS Trust in October 2006 (www.netherneprint.co.uk) and Sally Reynolds is currently assisting Devon Partnership NHS Trust to externalise Hillcrest Branch Social Firm in Exeter.

Perceived advantages/disadvantages of externalising Social Firms from Public Authorities

August 2007

Input from:

-          Marion Summers of Newco (Social Firm currently owned by Newham Borough Council, has been working towards externalisation for ca. 3 years now)

-          Steve Liddle of Luton Borough Council (in a Social Firm development role)

-          Graham Jones of Links to Work (manager of a range of Social Firm activities currently under ownership of Walsall Council but working towards externalisation)






Social Firm no longer subject to council recharges that bear no relation to services used

Lose cashflow protection


Freedom to purchase from companies that offer better terms than who we have to use currently because we are part of the council (have to use approved suppliers only)

Lose buying power of LA for goods and services (e.g. hefty discount on stationery supplies etc.)


Not subject to LA initiatives and pilots that have a cost implication to the business but no benefit to its aims and objectives



Profits can be spent or saved as you see fit and not swallowed up by the General Rate fund every March



Access to additional funding opportunities outside LA



Able to control budget which is not affected by other council department’s budget cuts etc.



Freedom to access loans as and when required




Ability to pay people rates that are commercial and don’t necessarily fit with LA rates e.g. as a window fabricator there are no established pay rates as no other LA employees do this work

Lose job security (LA will always try to redeploy employees to alternative posts if Social Firm goes bust)


More flexibility to employ people i.e. short term contracts, fixed term, etc.



LA’s have a Fair Selection recruitment process based on scoring. This is an intellectual process that many disabled people would be unable to understand/compete on. This makes it impossible to employ disabled people specifically for certain role – private companies can do this and be more flexible in recruitment generally



Business Practice / Management

Less red tape generally



Gain commercialism and freedom to undertake entrepreneurial activities – can be flexible and able to react to market trends and business opportunities

Lose wealth of expertise from other LA departments


Not subject to the procurement and tendering rules that you have when spending public monies

Supplier negotiation to open new trade accounts harder outside large body (references/status not a problem within LA)


More flexibility in gaining contracts e.g. new work with private industry



Can drop the ‘caring’ label (detrimental to business/perception of stakeholders)



Can compete on level terms with other businesses i.e. they recognise you as a business not a day centre



Ability to make decisions quicker e.g. to start a new job, purchase equipment, obtain a new building or close non-profitable/workable areas – simplified decision making based on calculated risk rather than political gain



How Can We Externalise Our Project From The Local Authority? Are There Any Examples Of When This Has Been Done Successfully?

Back to What Is A Social Firm?

>What Is A Social Firm?

>What Is The Difference Between Social Firms And Social Enterprises?

>What Is The History Of The Social Firm Movement?

>What Are The Main Issues Facing Social Firms At The Moment?

>How Do I Set Up A Social Firm? Is There Any Guidance On The Structure, Finance And How It Should Be Run?

>I Have An Idea For a Social Firm. How Can I Tell If It Will Work?

>Is There An Accreditation System To Show You Are A Social Firm?

>What Types Of Training And Business Support Are Available To Social Firms?

>I Run A Social Firm. Can You Recommend An Insurance Company Sympathetic To Social Firms?

>Is There A List Of Consultants Who Have Expertise In Social Firms?

>Where Can I Find A List Of Social Firms In My Region?

>How Can I Find A Job In A Social Firm?

>What Work Options Are There For A Disabled Person Following A Long Period Of Unemployment?

>Where Can I Find Information About Benefits Allowances And General Benefits Advice?

>What If A Private Investor Wants To Get Involved In Setting Up A Social Firm?

>Are There Organisations Equivalent To Social Firms UK In Other Countries?

>I Am Coming To The UK And Am Interested In Comparing Social Firms Here To Those In My Country. Is It Possible To Visit Any Social Firms?

>What Are The Issues About Having Trustees With Learning Difficulties?

>What Is A CIC (Community Interest Company)?

>What Is A Social Entrepreneur?

>Why Should I Join Social Firms UK?

>How Do Social Firms Sit Within The Spectrum Of Employment Provision For Disabled People?

>What Are The Likely Other Sources Of Finance For Social Firms?

>Why Was The Definition Of A Social Firm Broadened To The 'Severely Disadvantaged' In 2006

>What Is A Social Enterprise And What Types Are There?

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