“I think we need a social recovery, because as I have said lots of times in the past, there are too many parts of our society that are broken, whether it is broken families or whether it is some communities breaking down; whether it is the level of crime, the level of gang membership; whether it’s problems of people stuck on welfare, unable to work; whether it’s the sense that some of our public services don’t work for us – we do need a social recovery to mend the broken society. To me, that’s what the Big Society is all about..”
David Cameron, February 2011
“.. we believe in a union not just between the nations of the United Kingdom but between all of our citizens, every one of us, whoever we are and wherever we’re from. That means fighting against the burning injustice that, if you’re born poor, you will die on average 9 years earlier than others … As we leave the European Union, we will forge a bold new positive role for ourselves in the world, and we will make Britain a country that works not for a privileged few, but for every one of us.”
Theresa May, July 2016
Why is it that both Cameron and May have allowed their resolve to bring about a fairer society to be eclipsed by the European Union? Last Wednesday we have heard how the gap in life expectancy for the poor, directly included in Theresa May’s Downing Street speech above, is widening: on the very same day that she gave notice to resign. Then, on Friday, stark figures for child poverty were released.
Our poster was published just before the referendum: we knew then what the driver was for the Brexit vote. Cameron and May knew it too – and yet they have both allowed Brexit to trump their passion for social recovery.
The cynics will say that this passion was only ever lip-service, that we cannot deliver a more egalitarian form of capitalism. I disagree - the solution lies in democratising wealth creation, but that must be prioritised by Government. So while the Brexit row drags on, we look how the Government needs to use social investment to bring about social recovery. It can be done..
The key to achieving social recovery is to democratise wealth creation, and through that to galvanise the voluntary sector. The process it needs to work through is social investment.
There are already huge numbers of people working in the voluntary sector who have the passion and the drive to change things for the better. As we commented on 14th May last year, social welfare based on the socialist theory of state control and universal services will never address the needs of the poorest and most disadvantaged: socialism not only depresses economic growth but also reduces the funds available for targeted support, by distributing services without charge to those able to choose and meet the cost themselves.
Meanwhile our charities are filled with people with the potential to do what’s needed, but they are starved of funds.
Last week I attended the ‘Inside Government’ conference on social investment. It was no surprise to hear one member of the audience draw attention to government welfare cuts, claiming that the voluntary sector could not be a substitute for public expenditure.
The social investment sector is less than 10 years old, being born in the wake of David Cameron’s launch of the Big Society. But just because it’s embryonic at present, it should not be seen as stillborn.
In fact the infrastructure around social investment is quite well-developed already: one of its key sources of funds is Big Society Capital, the home of dormant assets. So David Cameron’s initiative lives on in name. There’s also really helpful resources available, such as Good Finance, which help charities plan for developing their use of social investment.
But it’s important to remember that social investment is just that: it’s investment, not a donation: so it must earn a return, a real monetary return which enables the investment provider to justify that commitment of funds. And because government is the beneficiary of serious reductions in the burden of social despair and disadvantage, it’s critical that structured programmes exist within government for measuring and paying out on those reductions to provide that return.
The first talk at the conference was given by the head of the government’s Inclusive Economy Unit, based at HM Treasury. He spoke very well, but when I asked whether government departments were systematically trained in how to assess the benefits accruing to the Exchequer from voluntary work funded by social investment, and whether departmental budgets included the provision to make those payments by results, there was no such reassurance.
There are £billions available for social investment which can deliver a proper market-based return: not only from money locked up in dormant assets within organisations such as Big Society Capital but also available from investors generally, both institutional and personal. All that’s needed is a proper structure of identifying, and paying out on, the returns achieved. We heard that New Zealand is a good example of a country which has made this work effectively.
The Share Foundation provides an example of how this could work. It operates a structured financial education programme called the ‘Stepladder of Achievement’ which enables care leavers to stand far less risk of becoming NEET (Not in Employment, Education or Training). Widespread implementation of this programme will achieve serious reductions in the cost of welfare, social housing and criminal justice.
A young person’s progress through the Stepladder is hugely accelerated if it’s incentivised by payments ‘earned’ into their Junior ISA or Child Trust Fund; but The Share Foundation must raise funding for such incentives voluntarily. Social investment fits this need well.
So if government pays by results as the financial benefit to the Exchequer is evidenced, that payment will fuel the return to the social investor. The Share Foundation would thereby be able to access substantial amounts of social investment, to apply right across the United Kingdom.
It’s easy to see that many similar social recovery initiatives are waiting for serious government commitment to recognise and pay out on returns achieved.
It’s difficult to guess who might be the next Prime Minister amidst the current chaos but, when we find out, let’s not make the same mistake a third time. Let’s join up the dots by prioritising social recovery, and let social investment grow up to take its place in funding a fairer society.
Gavin Oldham
Share Radio