Social investment opportunities and challenges for local authorities
0Last week, with the support of the Big Lottery Fund, Social Finance hosted a conference about Social Investment and Social Impact Bonds for local authorities. Over 50 different local authorities were represented with 300 attendees descending on the impressive Bristol Council House.
The conference considered the possibilities social investment might offer to a wide range of social welfare issues. These included public health, adult and children care services and social and affordable housing, the personalisation of care budgets and the creation of a service provision market.
Awareness of social investment came primarily through the Social Impact Bond (SIB) model. SIBs are a form of financing that aligns investor returns with social outcomes: investors only receive a return if the social outcome is achieved. Conference attendees were interested in the value that Social Impact Bonds could create. Despite the austerity measures, Social Finance firmly believes the social value of social investment products, and in particular the Social Impact Bond, is not fiscal savings (although of course this can be a welcome development for Local Authorities). Rather it is the development of new services at lower risk to government; raising productivity of services due to a focus on outcomes rather than outputs; the creation of reinvestment models for preventative services; and capacity building of the voluntary and community service provides who have real visibility in their funding streams.
Social Finance invited representatives from some of the councils it has been working with to talk about their work. One such speaker was Trish Haines, Chief Executive of Worcestershire County Council, who spoke about the potential of Social Impact Bonds in the health & social care system. In a context of rising service demand but fixed or (in real terms) reduced expenditure, Worcestershire is keen to explore alternative ways of funding crucial services. She believes that the SIB model can be a way of spreading the risk of innovation and might catalyse a change in service provision as a whole. At a time of uncertainty for local authorities, Trish struck a sobering note when she laid out the challenges that engaging with this new form of financing would entail. Setting up a Social Impact Bond is time consuming work and an additional challenge for officers already overburdened.
Social investment can provide local authorities with a long-term alternative source of capital. It can help reduce the risk of public service restructuring with prudent innovation. Socially motivated investors have a strong public ethos and are keen to affect real change. They are looking to provide investment into preventative interventions and are willing to fund programmes that otherwise would not have been financed or are deemed too risky for government to trial.
To echo the final thoughts from the chair of the conference, Lord Michael Bichard, at a time of frequent bad news, it felt uplifting to have so many people in one room galvanised behind the opportunity to explore new ways of financing service provision for some of the most vulnerable members of our communities.
Alisa Helbitz is a Director with Social Finance
For more information on the conference please visit: www.socialfinance.org.uk
