It is great to be here with you today to launch this important report on social investment.
I want to begin by saying thank you and congratulations both to the OECD, for putting this report together, and to all of you who have helped make it happen.
I particularly want to thank Sir Ronald Cohen who has done so much to spur the growth of social investment, first in the UK and now on the global stage through the G8 Social Impact Investment Taskforce.
Watch the Minister for Civil Society’s speech below.
Watch the Minister for Civil Society’s speech in full
Now, you all know that here in the UK we think that by using innovative finance to support the growing social economy, social investment can deliver economic growth, transform public service delivery and tackle some of society’s toughest social issues.
Social investment is not an answer to every problem, nor is it for every organisation, but it is important and it’s here to stay. So rather than tell you what you know, I want to share 3 things with you: a story, an opportunity and a vision.
- first, I want to tell you a story about what this government has done to support social businesses and social investors and to create the world’s most sophisticated social investment market
- second, I want to show you the opportunity that the social investment market presents for governments all over the world
- and third, I want to share our vision for the UK’s role in leading a global social investment market
The story of growing the UK social investment market
First, the story.
Over the past 5 years, this government has grown the world’s leading social investment market and developed an ecosystem of support for social businesses and social investors alike.
For social businesses – be they charities, community groups, or social enterprises – we’ve provided the investment and expertise that new enterprises need to turn great ideas into real, scalable businesses.
For example, our £30 million Investment Readiness Programme included a £10 million Social Incubator Fund – a fund that has supported StudentFunder, a financial technology business with a social mission to remove financial barriers to education.
What’s more – our investment and contract readiness funds have unlocked a staggering £25 of private investment for every £1 of government grant. Which just goes to show how much interest there is in social businesses that have innovative approaches to tough social problems.
And we have taken steps to ensure that this crucial grant support carries on for the long-term, by committing up to £60 million to a new independent social investment charity we’ve helped create called ‘Access’. Access will support charities and social enterprises to get the capacity-building grant programmes they need to grow sustainably.
For social investors we created the social investment tax relief – a groundbreaking tax relief that allows social investors to have a reduction in income tax for supporting causes that they care about.
And we brought together £400 million from dormant bank accounts and £200 million from our largest high street banks to create the world’s first social investment bank, Big Society Capital, a bank that has:
- helped create over 30 intermediaries specialising in lending to social enterprises
- committed close to £180 million of investments
- already got over £100 million of investments out into the frontline, of which over £60 millon of which has come from other co-investors, and, most importantly
- supported over 100 frontline ventures
Together, these programmes – capacity building support, long-term institutions such as Access and Big Society Capital, and initiatives like the social investment tax relief – have built some of the most comprehensive government support for social investment in the world.
In a new funding environment we’ve used our money strategically, working in partnership with the sector, and I’m proud of that.
The opportunity of the social investment market for governments
So, the opportunity.
At the same time we’ve been working externally to grow the social investment market, we’ve been working internally within the public sector to make use of it. That’s because we see social investment as an opportunity to transform delivery of public services.
We all know that governments, here in the UK and in many other countries, don’t have all the answers. We need new thinking, new ideas and new ways of ad dressing them.
And that is where social businesses can help. They are the real experts. Many are innovative, on the frontline, working with their communities and so know what works and what doesn’t and they are nimble enough to try new ideas and disrupt the status quo.
So we need to buy from them. That’s why the government introduced the groundbreaking Social Value Act, enabling public sector officials to think about long-term social value to their communities when commissioning services.
But I think we can go further. You will all be familiar with social impact bonds (SIBs), a product which brings together social investors and social businesses to deliver government services on a pay-for-outcomes basis.
Through social impact bonds we have developed a model which rewards successful innovation in the social sector, but where the taxpayer only pays for services that actually work. Already, in the UK, we have more social impact bonds that the rest of the world put together. I’m proud of that.
And, by publishing more than 600 unit costs of services to government, we’ve created a new relationship where social businesses can bid in to government and say “we can prevent that issue for happening for less than it costs you to deal with the downstream consequences”.
That’s better for the beneficiaries, better for society, better for social businesses and better for government.
So we are working to fund further SIBs. Last year, we announced a new £30 million package to help improve the prospects of at least 10,000 vulnerable young people through social impact bonds.
And we are now looking at other areas where SIBs can help taxpayers money be even more effective. Areas such as health and social care hold huge potential.
Our vision for a global social investment market
Finally, our vision.
I’ve told you the story of the steps we’ve taken to make social investment a success in Britain and of the opportunity that the market presents for all governments.
I now want to tell you about our vision for a global social investment market – a vision which drove our support for the G8 Taskforce and for this OECD report.
Markets grow through opportunities to meet, and through sharing information.
That’s why we supported initiatives like the Global Learning Exchange and Global Social Entrepreneurs Network. And that’s why reports like this one from the OECD today are so critical for our efforts.
I’m not embarrassed to wave the flag, and say that we want to sell social investment across the world. We have the unique infrastructure to do so:
- we have one of the world’s most evolved social enterprise markets, employing over 2 million people and contributing over £55 billion to the economy each year; and
- the UK is rated number 1 in the world for social investment professional services and number 1 for a supportive policy and legal environment, and that’s a mantle we don’t want to lose
These combined forces have produced exciting new deals that have commercial investors and social investors sitting around the same table.
One example is the £300 million Cheyne Social Impact Property Fund – a new fund, supported by Big Society Capital and managed by a leading hedge fund, that is dedicated to tackling the shortage of housing solutions for disadvantaged groups in the UK.
And at the end of this month, we are launching a new government GREAT campaign to promote our social economy.
As part of this we will be taking a group of our leading social economy professional services firms to New York on a trade mission, focused on ensuring that those deals continue to happen.
And so, to conclude; congratulations.
This report is an important part of the story of building the social investment market.
It will be a valuable resource for policymakers and researchers across the world who, like us, are committed to supporting social businesses and social investors.
We all know there is further to go, and this report can help us map out where we need to direct our efforts next.
Which is my challenge for your discussion today – not just to focus on what’s been achieved to date, but rather to spot the new opportunities for the next stage of growth of this important market.