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Affordable finance… the missing piece in the community empowerment puzzle

With the inauguration of Donald Trump, the prospect of hard Brexit inching ever closer, and a General Election campaign about to get into full swing, you’d have been forgiven for missing one of this year’s more significant announcements here in Scotland.

In late January, a new law was enacted which makes it easier for communities in Scotland to take over land or buildings that are currently in public ownership. It might not sound like such a big deal, but the Community Empowerment Act could potentially have a transformative effect on communities across Scotland.

The Act extends community right to buy to all of Scotland, both rural and urban, and allows community bodies to purchase land which is abandoned or neglected even where the owner is not willing to sell, if that purchase is considered in the public interest. It also includes new rules for asset transfer which give community bodies the right to request to purchase, lease, manage or use land and building belonging to public authorities unless there are reasonable grounds for refusal.

Essentially it gives more power to Scotland’s communities to have their voices heard in decisions that matter to them, and to take action for themselves. In practice, the organisations that are likely to be best placed to make such requests are social enterprises, who are looking to either increase their local social impact or to expand or duplicate their operations.

If the Act proves to be a success, it has the potential to be a game changer for the social enterprise sector, giving social enterprises across a whole spectrum of industries the opportunity to increase their role in their communities. We could be set to see a wave of empowered social enterprises becoming more active in local decision making, running public services and managing community assets in such a way that has community benefit and social impact at its heart.

At the micro-level, this might involve a community group taking over a plot of mothballed city centre land to create an allotment. At the other end of the spectrum, we could see community groups taking over failing libraries or town halls.

However, for the Act to succeed in its intention, there are two key things that need to happen.

The first is obvious. Given the role that local authorities play within this process, it is absolutely crucial that they understand their roles and responsibilities. The right processes appear to have been put in place to ensure that this happens. For example, each local authority must write an annual report about asset transfer, which details how many asset transfer requests they have received and how many have been agreed or refused or appealed.  It must also say how the relevant authority has helped community transfer bodies that want to make asset transfer requests. This level of transparency should encourage local authorities to dedicate the resource required to make the asset transfer process as efficient as possible.

The second is less obvious and comes down to finance. The Scottish Government’s guidance doesn’t say how much a community organisation should pay to buy or rent through asset transfer although it does support the notion of community organisations being able to pay less than the full market value. While we’d expect most asset transfers to take place for a nominal fee, there will be other costs involved to re-purpose, refurbish and maintain these assets.

At SIS we regularly meet with community organisations with aspirations to turnaround a failing public service, take over the management of outdoor space or acquire vital space to set up new services to address a social issue, all for the benefit of their community. Embedded in the local community, they know the support their community needs in order to thrive and have the ideas, determination and creativity to address the challenges they face. However, many of these organisations have struggled to access the finance they need to grow through traditional lenders.

Community organisations and social enterprises may well be placed to make best use of a public asset, but without the appropriate finance, they will simply be unable to fund those plans. Social investment provides organisations such as these, with a viable and sustainable funding mechanism which can help them deliver on their goals.

By working together to ensure empowered community organisations have access to the financial support they need we can realise the overarching aspiration behind this new legislation – a Scotland where local organisations are at the centre of decision making in their own communities.