Social investment should not replace public funding, says shadow Treasury minister

Anneliese Dodds, MP for Oxford East, tells the Labour Party conference it should not replace statutory services that should be carried out by the public sector

Anneliese Dodds (photograph: Getty Images)
Anneliese Dodds (photograph: Getty Images)

Social investment should supplement, not replace, public sector funding for youth services and there is a "clash of cultures" between social investment and the charities it funds, a shadow Treasury minister has told delegates at the Labour Party conference in Brighton.

Speaking at a fringe event about social investment in the youth and community sector, Anneliese Dodds, the MP for Oxford East, said social investment was part of a "mixed economy" but should not be used to replace statutory services that should be carried out by the public sector.

"Where I am concerned is that sometimes some of the rhetoric seems to suggest this could actually shift into some statutory services, and for me the whole point is that it should be operating in areas where there is such a high level of risk that local authorities and public funding can’t cover it," she said.

"I don’t think it should be moving into areas where ultimately we should have proper public provision and where we really need to have that stability of service quality, especially around statutory responsibilities."

Dodds also highlighted a "clash of cultures" between the predominately business-oriented language used by the social investment sector and the actual role youth charities play in society.

"Even the language we use is really interesting," she said. "We use the language of social entrepreneurs, but we are not talking about profit seekers but about people who are efficient in their use of constrained resources to get really good outcomes. Why do we attach the label ‘entrepreneurs’ to that?"

Other speakers at the event highlighted problems with the perceived complexity of social investment and about people’s understanding of how it worked.

Anna Smee, chief executive of UK Youth, said that acceptance of social investment was growing, but in the main because of charities’ problems in getting grant funding.

"Three or four years ago, people didn’t know what social finance was," said Smee. "It was a really big and scary thing and seemed like this crazy David Cameron idea that would never happen.

"Now we are seeing much more acceptance of it, mainly because people have no choice – they’ve been driven down such a challenging funding route they were willing to consider everything.

"But most of the youth organisations we’ve spoken to still don’t know where to go. They’ve never heard of the key fund, they’ve never heard of Big Issue Invest, never heard of Nesta and all the infrastructure that has grown up over the past five years. They didn’t see it as something for them."

Smee said that youth charities had typically struggled to collect good data and this needed to be improved. Best practice should be shared, she said, to help attract social investment.

Leigh Middleton, managing director of the National Youth Agency, said that many organisations were put off by the "significant complexity" of social investment agreements, and funders were still reliant on data and key performance indicators being met rather than more qualitative evidence about youth charities’ work.

Barry Williams, director of the youth charity membership body Ambition, said cynicism about social investment "is still out there" and he was concerned that some charities were hanging on for the return of grant funding rather than exploring alternative finance models.

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