NHS competition puts survival of social enterprises at risk, says think tank

BMJ 2011; 343 doi: (Published 03 August 2011) Cite this as: BMJ 2011;343:d4974
  1. Helen Mooney
  1. 1London

Increasing competition in the NHS under the government’s new proposals to open up contracts to “any qualified provider” risks putting social enterprise schemes out of business, warns a new report from the healthcare think tank the King’s Fund.

The report says that an increasingly competitive NHS marketplace for healthcare providers, including short term contracts for fledgling social enterprises, presents major risks for their survival. It says that the government must continue to offer legal and financial support to fledgling social enterprises if the sector is to grow.

It recommends that NHS commissioners offer longer term contracts to enable social enterprise providers to establish themselves in a more competitive environment.

Rachael Addicott, the report’s author and a senior research fellow at the King’s Fund, said, “Even at this early stage in the development of the social enterprise sector, it’s apparent that patients and taxpayers could really benefit. However, there is still a lot of work to be done by NHS commissioners, the government, and aspiring social enterprises to turn the vision of a thriving social enterprise sector into reality.”

The government’s white paper on open public services, published last month, restated its commitment to encouraging public service mutual organisations as part of its agenda for diversifying the provision of public services. But the King’s Fund report found that the number of staff leaving the NHS to set up new social enterprises is low and doesn’t bear out the government’s hopes for “the largest and most vibrant social enterprise sector in the world.”

The report also found that healthcare providers face “challenges” in establishing themselves as social enterprises. Many cite a lack of the right support to manage staff members’ concerns about changes to their terms and conditions, particularly pensions.

In March the health secretary, Andrew Lansley, announced that the government would make £10m (€11.5m; $16m) available this year through the health department’s social enterprise investment fund for NHS staff who want to set up social enterprises to deliver healthcare.

At the time he said, “The government wants social enterprise and employee ownership models to be a leading feature in healthcare provision.

“It’s not private businesses that stand to benefit most from this. It’s social enterprises and voluntary sector providers that have the greatest potential to benefit—that’s my hunch.”

Peter Holbrook, chief executive of Social Enterprise UK, formerly the Social Enterprise Coalition, told the BMJ that it was important for NHS commissioners to offer longer term contracts to “enable social enterprise providers to establish themselves in a more competitive environment.”

He said, “We are concerned that the proposed reforms will create an unequal playing field in which social enterprises are unable to compete with large private sector providers for public sector contracts. Social enterprises often do not have the capital or scale required to compete with big private businesses in open markets.”

Commenting on the report, a health department spokeswoman said, “Our commitment is to patients being able to be treated or cared for by the best possible providers. This means that social enterprises increasingly need to stand on the quality of the services they provide, rather than receiving preferential treatment through guaranteed contracts.

“The phased introduction of patient choice through ‘any qualified provider’ will provide high quality social enterprises with opportunities to thrive.”


Cite this as: BMJ 2011;343:d4974


  • Social Enterprise in Health Care: Promoting Organisational Autonomy and Staff Engagement is available at