Community businesses can increase employment in the COVID-19 recovery

Vidhya Alakeson, Chief Executive at Power to Change, discusses the power of community when it comes to an economic COVID-19 recovery

As redundancy rates reach record highs[1] across the UK, community businesses will be central to getting those hardest hit by the pandemic and spiralling unemployment back into work – but they need more investment and support to reach their full potential.

The crucial presence of community businesses

Power to Change’s new report Employment and Skills – the role of community business, written by the University of Plymouth, highlights just how crucial community businesses are in supporting those furthest from the job market; with 18% of community business employees being out of work before starting their roles.

It found that community businesses employ 7% more staff with long-standing physical or mental illness or disability when compared to their private business counterparts. They also employ a higher proportion of those with caring responsibilities when compared to the population at large (23% of volunteers and 11% of paid staff have caring responsibilities when compared to 10% of the general population). These individuals often struggle to find work in mainstream businesses, demonstrating the power of community businesses in providing quality employment for those that are likely to be hard hit by recent lockdowns and a shrinking job market in the aftermath of COVID-19.

When you give community businesses real power, which means autonomy and access to financial support, extraordinary things can happen — like Action West London. Over the past 12 years, four days a week, Action West London has been running the Acton Street Market. It provides self-employment opportunities for up to 30 traders each day and has supported local people to set up their own businesses. It has been particularly integral in supporting people from Black, Asian and other minority ethnic backgrounds into self-employment – groups that have been hit particularly hard by the COVID-19 pandemic.

Local employment rates and COVID-19 recovery

Still, the impact of community business goes beyond improving local employment rates; they respond to specific community needs and deliver the services that local people want. They are embedded into their local area and won’t run away when economic conditions get tough, as many have experienced during the pandemic. They run based on social purpose – their profit benefits local people rather than remote shareholders.

We can all see the fall out in our town centres of what happens when too many businesses are not committed to place, and that is why community businesses need to be at the centre of the government’s ‘build back better’ ambition and, moreover, provide a COVID-19 recovery opportunity that can be maximised with the right investment and support from central and local government.

In its latest Spending Review, the Government announced a new Levelling Up Fund which aims to invest in local infrastructure that supports communities and local economic recovery. Whilst the spirit of the fund is welcome, in its current form it will allocate funding from a centrally held pot and by doing so risks failing to deliver against its aims.

In many places, the Towns Fund, which can be seen as a precursor to the Levelling Up Fund, has had very little community involvement thus far. If the Levelling Up Fund follows a similar path it won’t deliver the benefits government and our communities want to see – stronger local economies driven by local people who understand their communities.

The need to invest in local economies

Similarly, it’s reassuring to see government commit to replace and match EU structural funding with the UK’s long-promised Shared Prosperity Fund (SPF). As plans for the deployment of the Shared Prosperity Fund and Levelling Up Fund are worked up, we want government to ensure that the funds are distributed in a way that goes directly to local people and communities to invest in their own priorities for their economy.

No one knows what an area needs better than the people that live there and it’s therefore vital that central government equip local government with the tools, funds and support that they need to support community businesses, and as a result drive economic prosperity in their areas.

In the meantime, at a local and regional level, local and combined authorities and Local Enterprise Partnerships sit on a golden opportunity – by incorporating community businesses in their strategic decision making around the economic recovery, they have a huge market of untapped potential.

Community businesses will be crucial in driving economic growth and local prosperity as well as ensuring a recovery that is equitable for all members of our society, including those that have been most marginalised and hardest hit by the pandemic.

[1]https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/november2020