By Astrid Zweynert
LONDON (Thomson Reuters Foundation) - Social investment has a key role to play in improving public services and will be at the heart of the next government's vision for social change, a British minister said on Thursday.
"It's pretty much part of the bigger picture for us to develop better solutions to the social problems our society faces,"Civil Society Minister Rob Wilson told the Thomson Reuters Foundation in an interview.
"We want to unlock more opportunities for charities and social enterprises to deliver public services, opening up public money and contracts for the sector,"Wilson said. If the Conservative government is re-elected in the May 7 general election it would scale up plans to boost social investment, he said.
"We all know that government, whether central or local, doesn't have all the answers and that big,centrally driven projects tend not to work really well because there is a lot of inefficiency.
"That's where social enterprises come in with local knowledge - they know their local area a lot better and we want to make sure they have access to finance to grow."
Government data shows there are 180,000 small- and medium-sized social enterprises in Britain, employing more than two million people and contributing 55 billion pounds to the economy. But despite the sector's growth, access to finance remains a problem for many social ventures.
"While the market has been growing considerably and become more diverse, finance is not accessible for all," Kieron Boyle head of social investment at the Cabinet Office, told the Thomson Reuters Foundation.
"For some organisations it's hard to get funding, sometimes because they are at an early stage in the journey and haven't got that track record yet to get the funding they need."
To help address the problem, the government last week launched Access, a foundation for social investment, which will offer small social enterprises and charities access to £100 million worth of capital, including a £45 million growth fund.
The growth fund aims to enable social lenders to overcome some of the challenges preventing access to social investment, for example it being too expensive, time-consuming or complex to enable them to make investments of up to £150,000 to charities and social enterprises.
Wilson stressed that social impact bonds made up part of the government's strategy to improve public services, which also included initiatives such as the Social Value Act and the Buy Social campaign, created by Social Enterprise UK to encourage people to purchase ethical products and services.
Britain launched the world's first social impact bond in 2010 to help raise funds from private investors for a programme to reduce re-offending among male inmates at Peterborough Prison. The aim of social impact bonds is to raise funding for social enterprises or charities directed towards creating social or environmental good with investors receiving returns if a specified performance goal is met.
There are now more than 30 such bonds in Britain, covering areas such as homelessness, foster care and youth unemployment.
"if we return to government, we're looking to scale this up at a much greater level than we have done before," said Wilson, adding that social investment in mental health was among areas the government was keen to expand.
Other key measures to boost social investment have included setting up Big Society Capital, the world's first social investment wholesaler, which has committed more than £180 million of investment since it started in 2012.
Social investment tax relief - the first of its kind in the world - allows investors to have their income tax reduced for supporting social ventures. Several funds aimed at helping social enterprises get ready for investment and help them to deal with the complexities of finance and measuring impact have also played a big part in boosting the market.
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