Has the social investment flagship sailed off course?

The Peterborough social impact bond pilot achieved much of what it set out to do, but the main failure has been in influencing the commissioners, writes Nick Temple

The Peterborough pilot tells us a lot about social investment and its relationship to the wider sector, writes Nick Temple
The Peterborough pilot tells us a lot about social investment and its relationship to the wider sector, writes Nick Temple

So much happens in such a short period in social investment that at times this column could function merely as a listings service of new products, new funds and new intermediaries. Since I last wrote, we've had the launch of Big Potential and the Social Investment Forum, as well as appraisals of the Investment and Contract Readiness Fund and CAF Venturesome after it completed its 400th deal.

There is lots to be gleaned from each if you have the time, but most of the talk and debate of late has been about the social impact bond pilot in Peterborough and the changing nature of the contract. What is that change? A fairly fundamental one - it will not be an SIB for its third cohort because of commissioning changes associated with the government's plans for the future of the probation service, Transforming Rehabilitation. Rarely has one initiative had so much hype, so it was inevitable that this news would attract coverage ranging from "they're doomed" to "what the hell does this mean?", followed swiftly by "don't panic, don't panic!"

New wave of SIBs

This news, rather awkwardly, arrived at about the same time as a different part of government announced a further £30m for a new wave of SIBs to improve the lives of young people through the new Youth Engagement Fund and the Fair Chance Fund. To put it another way, as the flagship appeared to be going awry, the next flotilla was being prepared to sail.

But is it too simplistic to say the flagship has gone off course? Advocates of the pilot will say that it has clearly done what a pilot should do - put an idea into practice, demonstrated the model can work and influenced others both within the UK and outside it. Critics will say that it has had unprecedented support and funding to achieve those goals, and that this news demonstrates the shortcomings of SIBs more generally.

I think this tells us a lot about social investment and its relationship to the wider sector and the way it works: a focus on social investment in and of itself tends towards a focus on products, raising and closing new funds and inward-looking processes; a focus on social investment as a means to an end tends towards a focus on building the right partnerships, on ensuring that all parts of the chain can work towards those ends, and on broader market conditions.

Risky business

I would argue that the Peterborough SIB has achieved much of what its advocates claim, but the main failure has been in influencing the commissioners. This is arguably still the biggest risk at local and national level for those investing in charities and social enterprises that deliver public services - commissioners change, priorities for commissioning change and political leadership changes. This can happen as easily in the field of improving young lives as it can in justice and re-offending. Despite this, it gets comparatively little sustained focus.

This sentiment was echoed by Ritchard Brazil from the care and personalisation social enterprise Deric, at Big Society Capital's second birthday recently. He said that social investment policy and product creation and design was "the easy bit" and that implementation on the ground was much tougher. He went on to say there needed to be a culture change and better understanding in local authorities and communities alike about these models if social investment was to succeed.

To put it more simply - if no one understands us, and no one pays us, we won't be able to pay you back.

Nick Temple is director of business and enterprise at Social Enterprise UK

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