Civil society minister puts faith in social impact bonds
Social impact bonds should play a key role in the development of improved public services in the UK, says minister for civil society Rob Wilson.
Speaking yesterday at a conference organised by Social Finance on behalf of the Big Lottery Fund’s Commissioning Better Outcomes Fund and the Cabinet Office’s Social Outcomes Fund, the minister said that this type of social investment put “the best outcomes for people at the heart of the service being delivered”.
He continued: “They put evidence at the heart of building better services for the public. The investment creates the space to innovate and develop better solutions to the social problems we face. Finally, and perhaps most importantly it’s a model that rewards successful innovation but where the taxpayer only pays for the services that actually work.”
Social impact bonds made up part of the UK government’s “bigger picture” plan to improve public services in the UK, he said, which also included “taking forward initiatives such as the Social Value Act and the Buy Social campaign” – which was created by Social Enterprise UK to encourage people to purchase ethical products and services.
“We in government want to unlock more opportunities for charities and social enterprises to deliver public services, opening up public money and contracts for the sector...We all know that government, whether central or local, doesn’t have all the answers.
“We need new thinking, new ideas and new ways of addressing big social issues. And that is where charities and social enterprises can help. These are expert organisations that are on the front line so they see what works well and what doesn’t,” said Wilson.
Rob Wilson MP. Photo credit: Institute for Government
Also speaking at the event was Katharine Horler, CEO at Adviza – a charity that supports young people to get into education or employment.
As well as voicing the benefits of social investment, such as the way it allowed organisations to be more innovative – which Adviza has had first hand experience of as part of a social impact bond – Horler also gave a reality check.
“Social investment can solve some public service problems, but not all of them, as social investment is not for everybody,” she said.
She went on to explain that while social investment, including social impact bonds, was suited to an organisation like Adviza, which because of the nature of its work was able to demonstrate clear, measurable outcomes – for example, whether the young people on its programmes saw improvements in school attendance, examination results or found sustainable employment – this was not the case for all public services.
Furthermore, Horler said that in order to be social investment-ready, organisations needed to “be strong” because they “have to go through a very intense process of due-diligence".
“As an organisation you need to have robust governance...the ability to gather evidence quickly to be able to present it to investors”, as well as “strong and robust financial structures”.
Geetha Rabindrakumar, social sector leader at social investment wholesaler Big Society Capital, which, over time, will have at least £600m to invest, echoed Horler's point that social investment was not for everybody and called for a "more diverse" UK impact investment market that was much bigger than Big Society Capital's contribution.
It was still "early days" for social impact bonds, she said. So far, just under 10% of Big Society Capital's investments had been made into this financial structure. Rabindrakumar said that her "hope is that over time" the processes involved in setting up social impact bonds "will be easier to replicate" and become "simpler", making it easier for all the parties involved.
There are now 25 social impact bonds up and running in the UK. The minister of civil society concluded: “We have more SIBs here in the UK than in the rest of the world put together and I’m very proud of that."
Keynote speakers at the Social Finance Conference. Photo credit: Social Finance
The 'Social Investment and Public Services: the next five years' conference was hosted by impact investment specialist Social Finance on behalf of the Big Lottery Fund’s Commissioning Better Outcomes Fund and the Cabinet Office’s Social Outcomes Fund.
These funds are making up to £60m available to pay for a proportion of outcomes payments for social impact bonds and other outcomes-based models. The deadline for expressions of interest is 30 June 2015. For more information click here.
Header photo credit: Kol Tregaskes