Social investment’s potential to transform local services

Partnerships powered by social investment are an increasingly important way of ensuring the vulnerable are not left behind by local authority cuts


Local authorities have suffered billions of pounds of spending reductions during the last five years. This has put a host of public services under pressure, from social care to children’s services to sporting and cultural provision. Our most vulnerable people have been put at risk, their lives already turned upside-down by the financial crisis and ensuing job losses, stagnating wages and cuts to other services.

However, local authorities do not have to take this lying down and many are responding to the pressure in creative ways. We are seeing councils design new models of partnership with communities that reimagine how services can be delivered and offer some hope for those currently excluded.

They utilise a new form of alternative investment, social investment, which brings in socially motivated investors to support these new partnerships. This collaborative approach resonates with the cooperative movement even in these testing times.

The partnership between Leeds City Council and the Garforth Neighbourhood Elders Team (NET) demonstrates how this can work to help the elderly in Leeds suffering from isolation, loneliness and problems getting out and about. Within this partnership, Leeds City Council commissions the services and NET, a Community Interest Company, refers older people with personal care budgets to community organisations in order to shape care packages around local activities and volunteer support.

By rooting this support planning in the community, care for older people is more in tune with local life and older people – allowing them to connect with local volunteers and engage with other older people from the community.

Garforth NET received social investment from DERiC (Developing and Empowering Resources in Communities), a social investment fund manager that raises capital from both public and private sources. The investment is repaid through savings made by the council. Through this investment approach, services can properly integrate with local communities, ensuring they have the flexibility to make decisions and deliver services for what they see best, with the council as a paid partner. This model could lead to strengthening the community fabric in the long run.

Like crowdfunding, also close to my heart, social investment is still a relatively new development. Community organisations and local authorities are still exploring how it could be used to address their own specific social challenges, and I would encourage more to do so.

There is however an increasing number of organisations out there working to find new ways it could be used. Among others, Big Society Capital invests in social fund managers, who in turn invest in a range of community groups, charities and social enterprises up and down the country. Other bodies, such as Social Finance, work with local authorities to offer more direct practical support on specific social projects.

In the context of such dramatic reductions in local government spending, new partnerships between local authorities and communities powered by social investment could be an increasingly important way of ensuring the vulnerable are not left behind.

I dearly hope that local authorities will continue to be able to provide a full range of services through the traditional tax-payer funded, but the potential of social investment to augment these services is enormous.

If you would like to find out more about social investment and how it is already making a positive impact, Big Society Capital are holding a drop-in session for MPs and staff – 2-4pm 10th February, Room U, Portcullis House.

Barry Sheerman is the Labour Co-op MP for Huddersfield and chairman of the Skills Commission. Follow him on Twitter

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