With the possible exception of the Houses of Parliament, there are few places you could expect to encounter four government ministers and a member of the shadow cabinet in the space of less than six hours.

But such is the level of political interest in 'social enterprises' - businesses run with a social aim rather than simply a profit motive - that health minister Ivan Lewis, trade minister Margaret Hodge, children and families minister Parmjit Dhanda and charities minister Ed Miliband all turned up at a conference in Manchester last month to talk about why the NHS and other public services need to better understand their transformational potential.

The government estimates that there are at least 55,000 social enterprises in the UK, accounting for around 5 per cent of all businesses with employees, and generating a combined turnover of£27bn a year - equivalent to almost 1 per cent of GDP. The best-known examples include Cornwall's Eden Project, Cafe Direct coffee, The Big Issue and Jamie Oliver's Fifteen restaurant. Other, often much smaller, organisations work in fields as diverse as recycling, international development and IT.

Cultural shift

So far, relatively few social enterprises in the health and social care field have won contracts to deliver NHS services, although there are a small number of fairly well-established examples.

South East London Doctors Co-operative, a non-profit-making limited company owned, managed and financed by 460 GP members, provides out-of-hours services for around 900,000 patients in Lambeth, Lewisham and Southwark.

Sandwell Community Caring Trust is a charity that runs residential and respite care and supported living programmes for people with physical and learning disabilities in the West Midlands, and the Kath Locke Centre in Manchester was the first NHS primary care facility in the country to be run by a social enterprise.

But if there was one message that came across loud and clear from the Social Enterprise Coalition's conference, it was that the potential exists for many more such organisations to help the NHS become more responsive to patient need - and that NHS commissioners need to undergo a cultural shift to facilitate more, and better, engagement with them.

'It has been a slow process to get the NHS to see working with social enterprises as a mainstream way of re-engineering health and social care,' Ivan Lewis told delegates.

'There is still a culture among commissioners of not understanding the contribution the third sector can make - often they reach for the same, tired old solutions rather than embracing the potential to work with social enterprises in assessing healthcare need and providing more responsive services. We have to get them to see this as a core activity.'

In September 2006, health secretary Patricia Hewitt (who worked in the not-for-profit sector before becoming an MP, and while trade and industry secretary established a new legal structure, the 'community interest company', to help such bodies) wrote a pamphlet setting out why social enterprises should play a greater role in 'unleashing the potential of staff within the NHS to deliver better services to patients'.

In it she made clear that social enterprises working in provider roles could be pivotal in giving local communities a stronger voice in how local health and social services are developed.

The community foundation trust model, currently under discussion by the Department of Health and Monitor, could offer one means to redesign services from the bottom up.

Another approach, Ms Hewitt suggested, was to find ways to allow the NHS to routinely contract with, or set up its own, social enterprises - for example to deliver services organised around care pathways such as stroke, diabetes or other long-term conditions, and perhaps to work in joint ventures with charities and voluntary groups.

Already there is no shortage of social enterprises keen to enter the NHS market. In October the DoH's social enterprise unit invited applications to become 'pathfinder' social enterprise projects. It got more than 400 responses in six weeks.

The 25 winners, announced at the January conference, will receive DoH backing up to a total of£1m to help them develop NHS-commissioned provision ranging from services for specific patient groups, like dementia patients, to wider activities encompassing primary and community care across whole districts.

The money is intended for start-up costs. Brian Strevens, chief executive of SCA Healthcare in Southampton, says it will help his company appoint a head of community health to lead further recruitment, for example. 'This is a great opportunity to scale up our operations and move over from social care and dentistry into community services,' he says. 'We wouldn't have been able to do it all on the basis of borrowing.'

The pensions debate

From April, a£73m fund will be available to the rest of the health market over the next four years, to support the development of other social enterprises. This month, the social enterprise unit is publishing an online resource pack that will direct PCTs and existing and potential social enterprises to guidance on how to get projects up and running.

A spokesperson for the unit told HSJ that it is investigating obstacles to effective working between the NHS and social enterprises and is feeding through ideas for possible solutions to relevant policy colleagues; any resulting changes to regulations or guidance will be reflected in updates to the resource pack.

One particularly contentious area is pensions, because staff must be employed by the NHS to qualify for the NHS pension scheme - which is still very attractive in comparison to most other pensions. It thus acts as a major disincentive to transferring to alternative types of employer such as social enterprises.

Ian Carmichael, a former primary care lead at South West strategic health authority, is now on secondment to set up one of the pathfinder social enterprises, the Forest of Dean Health Enterprise Trust, which aims to take over the running of two community hospitals and become an 'umbrella provider' for the area's 80,000 population.

He admits that solving the pensions issue could be a big headache. 'To make our ideas into reality we need to employ a lot of staff, and we're going to need a way of giving them access to NHS terms and conditions or it won't work. As a temporary solution, secondment might be the answer but even that is fraught with problems so this is certainly something that needs sorting out from the centre.'

At least one social enterprise - Central Surrey Health - has managed to find a way of keeping its staff in the NHS pension scheme while delivering services on a contractual basis, albeit without having gone through a formal tendering process. The nurse and therapist-led mutual limited company took over a three-year,£60m contract to supply community services including speech and language therapy to East Elmbridge and Mid-Surrey PCT in October 2006.

But DoH officials have yet to produce cast-iron, 'off the peg' solutions to the issue for social enterprises or other alternative providers, although community foundation trusts could be one answer, as could a version of the regulations that allow GPs to benefit from the NHS pension scheme despite being independent contractors.

And progress may not lie exclusively under the control of the NHS anyway, says former South West London SHA chief executive Julie Dent, who is advising the Social Enterprise Coalition on NHS issues. She says that while it is clearly unfair that nurses wishing to work as independent contractors should be excluded from the same advantages as GPs, 'there ought to be a private pension company out there that will take these people on, in an equivalent scheme'.

On a more general note, she argues, social enterprise throws up huge opportunities for the NHS.

'Social enterprise is not just the latest passing fad. It's a huge and exciting global movement, and part of it is about young people saying they want to work in a different way, that's businesslike but community focused. The NHS needs to respond to this, and to allow people to own, control and participate in these new ways of working.'

The challenge now, she says, is for commissioners 'to move away from contracts that micromanage right down to the level of what colour the walls should be, and instead define the outcomes they want and demonstrate how they're engaging with users and the public, where appropriate through the social enterprise model, to get there.'

The new social enterprise guidance

The social enterprise unit's resource pack will address new and existing social enterprises and charitable organisations looking to work in new ways in the health field, and NHS commissioners. It will cover:

  • the legal forms of social enterprise currently possible;
  • financing social enterprises, eg different sources of funding such as Big Invest, Adventure Capital Fund, Futurebuilders and lenders including the Co-operative and Triodos banks;
  • what kind of skills social enterprises need and where to go for training and support;
  • rules on consulting with the public (for commissioners);
  • options for securing premises, eg local authorities;
  • commissioning from social enterprises;
  • looking after the workforce, eg rules on TUPE, local authority staff regulations, the NHS pension scheme;
  • regulation and standards of care and clinical indemnity issues;
  • health service information systems;
  • resources to use for extra support and help, for example bodies supporting social enterprise, and NHS Networks and local/regional business support.

The resource pack will be published on the social enterprise unit's pages at www.dh.gov.uk