Social Investment

Debate between Jim Shannon and Rob Wilson

Wednesday 15th June 2016 Westminster Hall

[The Minister for Civil Society (Mr Rob Wilson)]

It is always a pleasure to serve under your chairmanship, Mr Chope. I begin in the traditional fashion by congratulating the hon. Member for Clwyd South (Susan Elan Jones) on securing the debate. I welcome her interest in a very inspiring sector. She said it was quite dry, but I found her comments very interesting and I will come back to some of her ideas in due course. Her comments should not have been unexpected because, as she said, she chairs the APPG on charities and volunteering. The group recently held a session on social investment, which obviously proved to be interesting and has generated a number of ideas.

Social investment can drive innovation in the sector, as we heard from the example of Splash Magic in the hon. Lady’s constituency. It is a powerful tool to tackle some of the biggest challenges in society today and, in the case of her constituency, to tackle jobs and growth issues. Social investment helps economic growth by supporting the UK’s thriving social economy. It also supports social innovation by channelling funding towards entrepreneurial solutions to longstanding social problems, and helps public services by delivering better outcomes and, in some cases, savings to the taxpayers.

I have embarked on an ambitious reform programme for charities and social enterprises because it is my aim to deliver a sector that is more independent, resilient and sustainable over the long term, and much better able to meet the challenges that it faces. Since the general election, the Office for Civil Society has supported the creation of a new fundraising self-regulator. I know that is not directly relevant to social investment, but it is still important to raising money for charities, in particular. The new self-regulator is being led by Lord Grade, as the hon. Lady will know. It has the legislative powers needed to give the public confidence that fundraising scandals are a thing of the past, and is a chance to restore the public trust and confidence needed so that a generous public continue to donate to the causes that matter most to them.

The new Charities (Protection and Social Investment) Act 2016 gives the Charity Commission tougher powers to enable it to regulate the charity sector much more effectively. As the hon. Lady said, the new Act also clarifies the law on social investment, enabling smaller charities to have the confidence to get involved in this hugely beneficial area.

The UK is now recognised as a world leader in social investment. For example, we set up the world’s first social investment bank, Big Society Capital—the hon. Lady went into some of its history—and the first social investment tax relief, which I will talk about further. The first ever social impact bond was also in this country, so we have a lot to be proud of.

We also created Access, the Foundation for Social Investment, to which the hon. Lady did not refer. That has £100 million to support more organisations to take on and get ready for investment, helping to stimulate the pipeline of social investment deals over the next 10 or 15 years. We have made money available through the local sustainability fund, which was created to help organisations to secure a more sustainable way of working by providing funding and support to help them to review and transform their operating models.

[Jim Shannon]

In addition to what the hon. Member for Clwyd South (Susan Elan Jones) said in her speech, we also recognise the good work of the Big Lottery Fund. It is always good to recognise organisations that make a significant contribution to social investment, and the Big Lottery Fund enables that to happen. Does the Minister feel it is important to encourage and support that?

[Mr Wilson]

The Big Lottery Fund has some £700 million of grants at its disposal each year, and it is an important part of the funding landscape in this country. It does an awful lot of great work, and I encourage organisations that perhaps have not made funding proposals to the Big Lottery Fund in the past to do so now. The Big Lottery Fund is trying to do a lot to make it easier for organisations to get hold of grants and to ensure that it is focusing on some of the more disadvantaged areas across the United Kingdom.

Returning to my previous comments, I want the leadership that the Government have shown on social investment to continue. The Government are therefore supporting social impact bonds, as the hon. Member for Clwyd South said, and so far we have created 32 social impact bonds, which is more than the rest of the world put together. We have enormous experience of social impact bonds and the social impact bond market. SIBs work on the principle that the Government pay only for the outcomes that we want to see and that we agree should be delivered. Social investors provide the up-front investment to scale up innovative services and are repaid by the Government based on the outcomes delivered.

SIBs are being deployed to get to the heart of some of the biggest challenges that we face as a country. They often focus on things such as early intervention, which will help us to contain the ever-expanding demands on our public services. I recently visited the AIMS—accommodation, intense mentoring, skills—project of the Local Solutions organisation in Liverpool, which is supporting young homeless people into accommodation, training and employment. The programme allocates a trusted mentor to each young person to provide a single contact point, delivering personalised support across multiple services. The programme is financed via a SIB and is a great example of how commissioning for outcomes can give social sector organisations the freedom to do what is needed, when it is needed. SIBs help to foster genuine partnership between the Government, social sector organisations and social investors, supporting organisations that can innovate in ways that big government finds difficult. Perhaps most importantly, SIBs focus on delivering meaningful outcomes for people, and there is more to come.

As the hon. Lady will probably have picked up, the Prime Minister recently announced our new £80 million life chances fund, which is an important next step on the journey and will show how social investment can transform local public services. The fund is a down payment on a social impact bond market that I hope and expect to be worth £1 billion by the end of this Parliament. I want to see more social impact bonds and to support those who want to use this innovative source of capital, which is why we are working with the University of Oxford to create a new centre for excellence that will develop world-leading research in social impact bonds and innovative Government commissioning and will provide the practical support that local commissioners need as part of that process, but there is more to the market than social impact bonds.