Tim Davies-Pugh
Chief Executive
In a time when the UK faces sluggish economic growth, rising living costs, and widening social divides, community businesses have emerged as a vital force to revitalise community spirit and stabilise local economies. These enterprises, owned and run by local people for the benefit of their community, play a unique role in driving inclusive economic development while strengthening the social fabric of villages, towns, and cities.
Power to Change, as part of our tenth year celebration of backing community business, is today publishing a foundational piece of research that, for the first time, articulates the economic contribution community business makes to the economy and sets out the case for how we can build on this success. ‘The economic contribution of community business’, along with the recently published readers’ guide, and the archive of research and data we have, makes a compelling case for why the future of business is community business.
Community businesses come in many forms: from local shops and cafes to energy cooperatives, farms, pubs, and cultural centres. What sets them apart is their embeddedness in the local area. They reinvest profits into their communities, generate local employment, and often serve as hubs for connection and mutual support. In doing so, they help to circulate money within the local economy, rather than allowing it to be extracted by larger, remote corporations.
The economic contribution of community business – and beyond
Our research shows that in 2022, 11,000 community businesses operating in the UK contributed over £1.5 billion in Direct Gross Value Added (GVA) [1] to the UK economy. Including indirect and induced GVA [2], community business generated a total economic contribution of around £5.8 billion or around 0.3% of the total national GVA. This compares favourably to the GVA of the agriculture, forestry and fishing industries, which when combined, total just around 0.6% of the total national GVA in 2023.
If a full social value-based approach to community businesses’ wider impact on their local economy is applied, their economic contribution increases to nine times that calculated through traditional economic measures. This equates to a staggering £95 million in social value in employing people who were previously unemployed; £471 million in volunteering; £183 million in training, and £1.7 million in general health improvements, or the equivalent of freeing up over 30,300 GP appointments.
The real value of community business, however, extends beyond these economic measures. They are often found in deprived high streets, rural villages, or post-industrial towns, providing services and creating employment opportunities where they are needed the most and often where mainstream commercial investment is very thin on the ground.
Crucially, community businesses also foster resilience. During the COVID-19 pandemic, many quickly pivoted to provide food delivery, digital inclusion support, and emergency assistance. This adaptability and grassroots knowledge highlight community business’ importance not only in recovery periods but in preparing for future crises — economic, environmental, or social.
Moreover, they nurture a sense of ownership and pride amongst residents, which is essential for social cohesion. In an era marked by polarisation and disconnection, the shared endeavour of running and supporting a community business builds bridges between generations, cultures, and socioeconomic groups.
Community business is key to growth
For the UK to achieve balanced growth, we need to think beyond large scale infrastructure and emerging technologies. We need to embrace purpose-driven business, including community business. Policymakers should invest in community business infrastructure, simplify access to funding, and offer training and support to local community entrepreneurs. By doing so, they will be backing a proven model of sustainable economic growth that brings people together and leaves no place behind.
Community businesses are more than economic actors and more than community support organisations — they are the heartbeats of local resilience and revival. Supporting them is not just a policy choice, it is a national imperative.
[1] Direct GVA means the direct employment and economic output resulting from the production of goods and services. In our research, direct GVA is measured as the sum of the renumeration of employees plus gross operating profit.
[2] Indirect GVA means the value generated in the wider supply chain and suppliers from the production of goods and servces. Induced GVA means the value generated by increased spending of community business suppliers and employees.
