Wednesday, 20 May 2015

Gordon Brown deserves praise as his Big Society idea Flourishes- Anthony Hilton

Gordon Brown, Former UK Prime Minister. Photo: Wikipedia

For more than a decade one of the things Brown fought for was that orphan assets — the sums that had lain untouched and unclaimed in bank accounts for 20 years or more — should be mobilised and used for charitable purposes.

The banks strung out the process for as long as they reasonably could because they rather liked using the money themselves but eventually £300 million was handed over to endow what is now known as Big Society Capital.

That organisation publishes its third annual report today, and encouragingly it seems to be getting traction.

It says it has been involved in making available £104 million for charities and £359 million in social investment in the past 12 months.

This does no all come direct from Big Society Capital but is raised for projects it has helped to mobilise by providing support and part finance. Indeed, one way it creates impact is to encourage others to come in alongside it.

The social investment space is particularly interesting because much of it is directed at long-term inner-city problems and areas of social failure that eat up local authority funds but never seem to get any better.

Social investment bonds were only invented in 2010 but through them Britain can claim to lead the world in adapting financial-sector techniques and expertise to help tackle social problems.

Social impact bonds are about mobilising private-sector money and using it to employ dedicated experts to tackle social problems but with payment very much geared to results.

Private investment has never really got into this area in the past because while there is a benefit to society in having fewer reoffenders going back to prison or lower levels of youth unemployment, it cannot be measured in cash.

Social impact bonds are clever because they have found a way round that problem. The money to finance a project is raised by selling bonds to investors. If the project works, the investors get a return; if it fails to improve things, they lose.

Typical projects are finding homes for difficult-to-adopt children, tackling youth unemployment; helping troubled families cope to reduce the risk of children having to be taken into care, dealing with homelessness and seeking to minimise the likelihood of prisoners reoffending on release.

The charity uses the bond funds to do the work and is paid on the basis of results achieved by the local council. If it does well, the charity gets enough to declare a dividend on the bonds; if it does poorly, the public body pays less and there is little or nothing for investors.

The reward, for example, for helping a dysfunctional family to cope is enough to make a reasonable return on the bond but still massively less than the £180,000 a year it typically costs a council to look after a child in care.

So society is achieving much better outcomes and deep-seated problems are being systematically addressed — and all for less than we were spending anyway. And all credit to the former Prime Minister.

Without him Big Society Capital would probably never have happened.

Source: Evening Standard. Link:

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