Cliff Prior, chief executive at Big Society Capital, which works to boost investment in charities and social enterprises, said greater power for councils could break down silos that can hinder joined-up social interventions.
A report published by BSC last month found the social investment market in the UK was worth at least £1.5bn, and Prior said there was growing use of approaches such as social impact bonds to help charities take up contracts with local authorities to tackle social problems.
In total, 31 SIBs (where investors get repaid once the interventions have been successful) have been issued in the UK across areas such as homelessness, looked-after children, social isolation and supporting people with long-term conditions.
Speaking to PF just four weeks after taking up the post at BSC, Prior said these had shown “particularly good potential” to protect against harm that would otherwise cost the public sector more in the future.
“Government agencies don’t have the potential to put that preventative activity in place because they would have to double run [with existing provision], so bringing in a social investor can take some of the risk of that and allow charities and social enterprises to use innovative approaches to achieve that preventative goal,” he said. “And we are now seeing that.”
SIBs provide funding for charities to take on payment-by-results contracts with public bodies, and can be used to share the risk.
As the funding mechanism allows more charities to take on such work, Prior said he would expect to see both “standardisation and specialisation”, with models developed by social enterprises more widely adopted.
This could include service integration similar to the government’s Troubled Families Programme, which has seen local authorities and charities work to better integrate provision across areas including worklessness, family breakdown and poor educational attainment.
“As social investment gets understood across the whole of the sector there will probably be some very specialised areas,” Prior told PF.
“I think we all know, and local authorities certainly know, that a very small number of people have very intense multiples needs where conventional services which tend to be based in silos, simply don’t work, and there’s a lot of damage to the people involved and a lot of damage to the public purse. That’s where you’d expect specialisation to be.”
Devolution could therefore allow local authorities to commission across a range of policy areas, Prior indicated. Deals reached so far have seen Greater Manchester take control of NHS spending to better integrate health and social care provision, and recent plans include localisation of spending around criminal justice including offender management. A series of other agreements have been reached with combined authorities around skills, transport and economic development.
“I think what‘s happening by way of devolution to localities could bring about a really big change, coupled with outcome-based finance approaches,” Prior added.
“It gives the opportunity to these authorities getting the devolution to pull together resources that otherwise would have been siloed, and that’s where you can get really great benefits.
“We know it works, the problem is always can you get enough different government agencies to agree to do this at one time. Perhaps with the new devolution arrangements, more of those are coming under a single banner is easier to make that happen.”
Setting out how the public service delivery role of charities and social enterprises could expand, Prior urged auditors to work with charities on ways to measure performance that would make outcome-based payments more robust. The third sector was getting better at assessing impact, with a number of international standards having been developed, but more needed to be done, he said.
“At the moment it is all very bespoke and manual. We need impact measurement to be of positive value and as economical as possible, rather than being a huge research project every time you do it, which is just going to be unaffordable.”
