The case for establishing a UK social economy satellite account
Leading UK economists – led by social sector experts Pro Bono Economics (PBE) – have today called on the government to close a “significant gap” in its understanding of the economy by establishing a dedicated social sector statistical account.
The approach, already adopted by governments in many other advanced economies, would allow statisticians to more accurately capture the size and economic contribution of charities, social enterprises and volunteers across the UK.
Currently, the UK’s national accounts – the statistics which describe the size and nature of a country’s economy – provide an incomplete picture of the economic contribution of the social sector. While the nation’s GDP figure includes activity of all sorts – including the proceeds of illegal drug sales – the value of the volunteer hours provided by millions of people around the country every week is almost entirely absent.
Even when it comes to the activity of formal social sector organisations the current approach falls far short. The UK accounts do include a ‘non-profit institutions serving households (NPISH)’ category, but this classification omits any organisation which generates income by selling products or services – something which many charities and social sector organisations do.
Instead, data on social sector organisations are spread across different ‘sectors’ and ‘industries’ in the national accounts, making it impossible to separately identify the true size of the social sector.
The introduction of a new ‘satellite’ account would bring all the data relating to the social sector under one roof, and would enable the ONS to properly determine the economic and employment contribution of the UK’s wide range of non-profit organisations and volunteering activities.
This would bring the UK into line with the 28 countries globally, including the US, France, Japan and Brazil, that already have social economy satellite accounts, as well as 10 others that have committed to creating one.
The accounts established in other countries suggest that the social sector contributes around 5% to GDP on average, making it a significantly larger proportion of a country’s economy than is implied by the UK’s current approach, which returns a figure of just 1% of GDP.
PBE has long argued that the chronic undervaluation of the sector in official statistics has led to it being overlooked in policy terms. The organisation’s report, commissioned for the Law Family Commission on Civil Society, titled ‘Taking account: the case for establishing a UK social economy satellite account’, which has been backed by a number of leading economists, says that a social economy satellite account would mark an important first step in overcoming this undervaluation and associated policy neglect.
The move is seen as especially vital in the wake of the pandemic, with the crisis bringing the consequences of sustained policy neglect into sharp focus. Demand for support from the social sector has rocketed over the past year, but many organisations have faced significant constraints on their fundraising capacity. Yet, despite an apparent funding gap within the sector in the region of £10billion, the government put together a rescue package of just £750million.
Anoushka Kenley, Research and Policy Director at Pro Bono Economics, said:
“Establishing a dedicated social economy satellite account would be an important first step towards recognising the true size and economic contribution of the social economy in the UK. With chronic undervaluation of the sector leading to consistent policy neglect, such a move is essential if the UK is to unleash the full potential of the social sector and so help support a full recovery from the pandemic.”
Andy Haldane, former Chief Economist at the Bank of England and incoming Chief Executive of the Royal Society of Arts, said:
“What is not measured is not managed. And what is out of statistical sight tends to be out of public policy mind. A comprehensive set of satellite accounts would provide the statistical foundations necessary to improve understanding, and increase the impact, of the social sector.”
Diane Coyle, Bennett Professor of Public Policy at the University of Cambridge, said:
“Policymakers and businesses can make better decisions the more information they have. This report identifies a significant gap in the evidence available about the UK economy. Everyone will have personal experience of the important role of the social economy sector, whether through volunteering, charities or social enterprises. But without a comprehensive view through official economic statistics its importance cannot be fully appreciated: it is a missing piece of the jigsaw. A satellite account is a realistic approach to a better understanding of the way the economy operates.”