The Right Hon Nick Hurd was a minister under three Conservative Prime Ministers. As Minister for Civil Society, he led the work on social investment. He is chair of Access – the Foundation for Social Investment.
Ministers rarely get an opportunity to drive system change that lasts. The average tenure of a junior minister is around 1.5 years. Even those who have a plan rarely have the time or experience to implement it. Too many governments start with strategies measured in years and end up managing the week. Even when major change is implemented, successive governments tend to unpick or ignore the achievements and knowledge of their predecessors. There are exceptions, such as the cross-party approach to climate change but they are rare.
This dysfunctional set-up underpins the significance of the low-profile Dormant Assets Bill going through Parliament. In the far reaches of the Government garden, the DCMS is nurturing a small but well-established money tree called the Reclaim Fund. Through rigorous processes that protect asset owners, this distributes genuinely dormant private assets to common good initiatives that have a positive social and environmental impact.
Initiated by a Labour government in 2008 and built on by successive Conservative-led governments, it has brought to life over £800 million of investment in positive change across the UK. In England, the law to date has limited the scheme to supporting youth employment, financial inclusion and social investment in charities and social enterprises.
This is a British success story, being copied in other countries, not least Japan and South Korea. More importantly, it is a driver of the long-term thinking and better system building that governments find so hard.
Take the English social investment pillar for example. Thanks to dormant assets the big idea that finance can achieve a social, as well as a financial return, has firmly taken root over the last decade. It was the Coalition Government that set out to build a social investment ecosystem to give our invaluable charities and social enterprises more opportunity to access patient capital and reduce their dependence on short-term grants.
We created the world’s first wholesale social investment bank in the form of Big Society Capital. This was swiftly followed by the creation of Access – the Foundation for Social Investment. As a result of the concerted efforts made, the social investment market has increased eight-fold in a decade to more than £6 billion invested in charities and social enterprises in the UK. This means that it is growing on average at 25 per cent a year – more than twice as fast as mainstream capital markets are growing. This would not have happened without dormant assets.
The scheme is being expanded and the Government estimates that a further £800 million could be released for investment in activity that is additional to government expenditure. Consultation on use of new money will begin before the summer.
My plea is that we continue to use this money strategically. There is always a temptation to be tactical and buy a headline. However, this money is a real asset in any serious long term plan to “level up” and reshape the map of opportunity in the UK.
In the case of social investment, there is an opportunity to evolve our strategy for even more impact. We have learnt so much about how to get money to the places and communities that so desperately need it. For example, the Growth Fund (a £50 million partnership between The National Lottery Community Fund and Big Society Capital, delivered by Access through a range of social investors) has innovated in blending grants and loans to support small charities and social enterprises with the proportion flowing into our most deprived communities four times that of the wider social investment market.
Given the well-documented importance of these organisations in creating jobs; providing better solutions to social challenges; supporting the vulnerable and bringing people together, this is critical investment in our social capital and infrastructure.
Importantly this isn’t just about money. It’s about power. Instead of relying solely on the state to solve society’s problems, this is an opportunity to bring together those making a difference in communities with the flexible, socially motivated investment they need. By encouraging investment into the grassroots through local community-led enterprises, it is putting more control back into the hands of local communities to address the needs they see.
This is a rare opportunity to build on success and drive system change that lasts. There is a modest money tree, let’s make the most of it.