Autumn Statement 2015: Big Society Capital responds
With the spending review dust settling, what does this all mean for social investment? Matt Robinson and Daria Kuznetsova from Big Society Capital reflect.
As George Osborne walked into the House of Commons, everyone suspected this was going to be one of the toughest budget settlements in the last thirty years. And in many ways it was, albeit not as bad as expected due to the £27bn windfall in public finances.
Unprotected departments will have to make budget cuts of up to 25%, central government grant to local authorities will be phased out by 2020 and reductions in housing benefit will take place. The implications of these cuts will be significant for charities and social enterprises, both in terms of their sources of revenue as well as in the changing needs of the beneficiaries who will be interacting with public services in new ways.
However there are some positive developments to highlight. Firstly, the protection of Big Lottery Fund from budget cuts is crucial for the social sector as whole. The Big Lottery Fund is a key source of income for a vast number of small and local social sector organisations who would struggle to survive without the Fund’s support.
There is also continued support for the development of social impact bonds (SIBs) and the use of outcome based commissioning to tackle difficult social issues such as homelessness and youth unemployment. A total of £105m will be spent on SIBs – £80m of this is to be spent on topping-up locally commissioned schemes and will likely leverage in significant additional funding from those local areas in outcomes payments. This announcement is in line with a proposal submitted to the HM Treasury by Big Society Capital and social sector partners in September.
In addition to the funding allocated for SIBs, a further Innovation Fund of £40m under NHS England will be set up to fund innovative schemes targeting health and work outcomes.
The Spending Review also included a new programme of support for the long term unemployed and people with disabilities who have not been successfully supported by the Work Programme. These initiatives will likely create new opportunities for social investors to partner with government and the social sector in designing these schemes and lead to further demand on upfront finance to deliver them.
Finally, the announcement of a ‘Costing Unit’ is intriguing – certainly anything that helps to better understand the current (and huge variation!) of cost in public service delivery is most welcome. While there is a chance all of these programmes will invigorate local outcome based commissioning and encourage the development of preventative and community based interventions, the small absolute scale of these initiatives keeps them firmly in the ‘innovation’ box. Arguably the spending review has missed an opportunity to make outcomes based funding and preventative models a much more fundamental tenet of public service reform.
Another missed opportunity comes from the Chancellor’s confirmation that generation of renewable energy will no longer be eligible for any investor tax reliefs, including EIS, VCT and the Social Investment Tax Relief in future, following a previous ministerial statement. This, on top of the expected abolition of Feed-in-Tariffs, will effectively put the brakes on the promising growth of genuine community energy projects.
Beyond the headline announcements there is still much to understand about the final impact on the social sector and social investors. There is still much to play for and to be excited – as well as worried – about.
Photo credit: Liz West