Public services demand a radical shift to the social economy
Posted: 18 June 2026, in News
As the new Scottish Parliament term gains momentum, what can Scotland do differently with the urgent challenge of public service reform?
Real world success
Social enterprises are already delivering essential public services in neighbourhoods right across Scotland.
According to Social Enterprise Census 2024 this includes community spaces, health and social care, early learning and childcare, energy, education, housing, improving the environment and transport.
In addition, the study shows that nearly 50% of social enterprises do business with the public sector and almost 80% of social enterprises serve the general public.
Social enterprises are experts in innovation, prevention and early intervention, with many diverse, successful examples in all sectors.
We have The Wise Group in employment, justice and skills and there are local, responsive transport operators like Glenfarg Community Transport and South Ayrshire Community Transport.
Giraffe Healthcare CIC deliver web-based physiotherapy and we have Newfield Medical Group cooperative and Shore Psychology, as well as Atlantis Community Leisure delivering health and sport in Oban.
In addition, there are examples like the NHS Lothian and third sector partnership and of course Scotland has many social housing providers like West Granton Housing Co-operative and Edinburgh Student Housing Cooperative.
Alongside charities, community owned organisations, cooperatives and other ethical enterprises, they’re demonstrating a different way to practice public service.
The privatisation experiment
Over the past few decades the UK has seen the privatisation of many public sector services.
Water and energy companies and the Royal Mail have been sold off. Owners of this critical national infrastructure now include influential billionaires based in Czechia, the US and Hong Kong.
This has come alongside permanent taxpayer subsidies for England’s inefficient, privatised railways, sometimes known as corporate welfare.
The use of big, expensive, private outsourcing companies has been an ongoing trend too and the now discredited PFI/PPP deals has meant huge long-term bills for taxpayers.
This approach of privatisation at any cost, driven by politics rather than sound economic principles, has often failed to achieve good outcomes for people or our economy.
Scotland doing it differently
In Scotland we’ve been different in many ways, with the government owned Scottish Water and a rejection of many market reforms in the NHS.
ScotRail was also brought back into state ownership after being owned by the Dutch government (though an alternative to this top-down nationalisation could mean a Go-op-style cooperative railway).
There’s been a lot of work to open up public procurement too, including positive developments like the Buy Social Scotland programme, as well as the growth in community ownership.
We now have the huge potential of our world-leading Community Wealth Building legislation. But how can we achieve a tipping point for real change?
New solutions
It’s clear that the public sector, on its own, doesn’t have the required knowledge, flexibility and innovative mindset that’s needed for real change. It can get easily tied up with bureaucracy, red tape and centralisation.
In turn private sector providers are mandated to prioritise profits and shareholders above other considerations and simply can’t prioritise community interest and long-term thinking.
Social enterprises and similar organisations have a clear, unwavering social purpose and are required to re-invest all profits into their mission.
They’re deeply invested in their local communities. They also have a public service mindset, embracing Fair Work and other ethical practices and are a central part of the solution.
It’s also welcome to see commitments to learning from the voices of public service users and employees – the experts with lived experience. They must be at the heart of the public service reform agenda.
This is about improving public sector performance by embedding genuine democracy and surely means having customers and employees on public company boards.
Local authorities have ALEOs delivering leisure, property and other services. These are arms-length companies that are often registered charities. Could they become social enterprises of some form too?
What about the NHS? While free healthcare should of course be a fundamental right, social enterprises and employee-owned companies could do much more, particularly in prevention and specialist healthcare.
A strategic approach
Certainly all political parties are keen to discuss the scale and nature of the task ahead, as demonstrated in the recent parliamentary debate.
In Scotland’s Public Service Reform Strategy – Delivering for Scotland, published last year, the Scottish Government pledged to ensure better integration of services and to support social economy organisations to be a key delivery partner:
“The third sector…is often more trusted by people enabling stronger relationships to be built that help to understand need more deeply. However, short term static funding, limitations in procurement, and declines in private giving and volunteering present real challenges. At the same time the sector tells us they can feel disconnected from how services are designed and delivered, and are regarded solely as a provider, despite its knowledge, experience and significant ability to leverage in capacity and capability.”
Ivan McKee MSP, the newly appointed Cabinet Secretary for Public Service Reform, seems to understand the scale and urgency of the challenge and recently described reform as the “defining task of this session of Parliament.”
The future must be different
Politicians and the media still often talk about public services as if there are only two rigid options – public or private sector, nationalised or privatised.
Social enterprises offer genuine alternatives to this narrow, binary debate.
Scotland needs urgent action to drive public service reform, for financially sustainable public services and a democratic economy, as well as to achieve Community Wealth Building.
Locally owned social enterprises, charities and co-operatives are real, viable alternatives that place people and planet at the heart of delivery. They offer huge potential to build something better.
If we have the drive and ambition then Scotland could become a world leader in new ways of delivering public services – with just a little fresh thinking and the political will to make it happen.
Duncan Thorp, Social Enterprise Scotland
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