Writing about financial affairs in the period between Christmas and New Year is a daunting challenge. Honestly, who wants to read about business on Boxing Day?

The task is particularly arduous in the current economic climate. Workers are cutting back on festive spending as the cost-of-living crisis grinds on, business confidence is falling, and a UK recession is just a hair’s breadth away. The cup of cheer is far from overflowing.

Those looking for inspiration as we head towards what will be another tough year in 2024 should ponder the potential of profits with purpose. When faced with a challenging economic landscape, social enterprises have been shown to be more resilient than their traditional business counterparts.

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It is no coincidence that the social enterprise sector gained a great deal of momentum in the years since the international banking crisis, which was followed by a protracted period of economic austerity, the subsequent economic shock of the Covid pandemic, and the ensuing spike in global inflation. Individuals, families and communities have been pushed to the financial brink, giving rise to the urgent need for doing business in a way that has a positive social impact.

According to the latest survey of the sector by Social Enterprise UK, there are roughly 131,000 “mission-led” organisations in the UK employing 2.3 million people and generating approximately £78 billion in annual turnover. From this they made more than £1.2bn in profits, of which £1bn was reinvested into their social and environmental missions.

Among them is Courtyard Pantry, which was set up two years ago by former investment banker Dale Todd to help reduce food poverty in one of Scotland’s most deprived areas.

“I worked for a global investment bank for over a decade, in London and laterally in Glasgow, which was very high pressure and tense but also well paid,” Mr Todd said. “I was promoted to vice president and I remember feeling that I was reaching the end of the road – I realised it wasn’t the right fit for me and harboured ambitions to work for a third-sector organisation, in a job with purpose and meaning beyond making money.”

The Herald: Dale ToddDale Todd (Image: Courtyard Pantry)

Courtyard Pantry operates a catering service alongside Toshie’s café in Possilpark. The operation helps more than 100 people each week and has distributed more than £400,000 worth of food since launching in April 2022, while also creating training opportunities and jobs for people who have faced various barriers to employment.

“I firmly believe social enterprises and cooperatives are a big part of our future in terms of economic development, pre-distribution and redistribution of wealth,” Mr Todd said.

“The current system is not working for the majority of people – economic growth must be ecologically and socially sustainable, and social enterprise feels to me the way forward. I’d encourage more people in financial services to come over and share expertise, and overall do good.”

Social enterprises are often regarded as what MSP Paul Sweeney, a trustee of the Courtyard Pantry, describes as the “Cinderella of entrepreneurialism”: “That they’re to be pitied, grant dependent, and financially unsustainable. But they are about more than that – building an alternative economy, earning profits and reinvesting them locally.”

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According to researches at London-based think tank Demos, businesses such as B Corps, social enterprises and co-operatives outperform their peers with faster growth, higher levels of innovation, more investment, and better levels of staff engagement. The group believes that rewriting the rules of business to put purpose on par with profit could inject billions into the UK’s flatlining economy.

Last week the ONS revised down its third-quarter figures to show a 0.1% decline in the UK’s gross domestic product (GDP), having previously estimated that the economy had stagnated in the three months to the end of September. There was also a downward reversion to the second quarter figures with the ONS now calculating that GDP flatlined during that period, having previously estimated growth of 0.2%.

A further fall in GDP during the current quarter to the end of this month would officially put the UK in recession.

A report published at the end of last month from Andrew O’Brien, director of policy at Demos, claims that the economy could receive a £149bn boost by changing the Companies Act and adding a duty for directors to consider the social, economic and environmental impact of their business alongside profitability and returns for shareholders.

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The idea is said to have some cross-party support and is backed by a coalition of 2,000 businesses but has also been attacked by others such as the Institute of Economic Affairs which described the proposals as “extremely dangerous”.

Mr O’Brien has rebuffed the idea that such a move is an attack on the profit motive.

“[Critics] seem to be quite scared that businesses will have to think about the environment and society, and that somehow they won’t be able to compute all of that, and they will collapse,” he was quoted as saying. “That’s frankly very patronising towards people who work in business in the private sector, who are very smart people who can manage multiple things.”

While highly unlikely that the current UK government would ever consider such a move, Demos has been described by some as New Labour’s “favourite think tank”, suggesting that the idea could gain further traction should Sir Keir Starmer’s party prevail in next year’s general election.

Despite the warning signs of impending stagflation, the Bank of England’s continuing tough talk on interest rates remaining “higher for longer” proves the majority of members on the Monetary Policy Committee remain hidebound to standard economic management that threatens continuing misery for businesses and consumers. It’s time for politicians to take responsibility with some fresh thinking on how to boost the fortunes of all and break the UK out of it miserable economic and productivity track record.