Social impact bonds are clunky and expensive, more money from unclaimed assets is available to fund the sector, and Labour may expand the Social Value Act, a Parliamentary debate on the social economy heard earlier this week.
Nick Hurd, Conservative MP for Northwood, Ruislip and Pinner and the former charities minister, told a Westminster Hall debate on social economy on Tuesday that social impact bonds were “clunky, take too long and are too expensive to set up”, and that they needed to be improved.
“On social impact bonds, let us be clear that we are at the bottom of the S-curve of the development of that instrument, which is so important because it creates space for social innovation in a system that is risk-averse,” he said.
"We now need to find a different gear of ambition to make many more of those things in the marketplace, so that we can test whether the instrument is as valuable an influence as we think it is.”
Hazel Blears, Labour MP for Salford and Eccles and the former communities secretary, told the meeting that there was a lot of money in unclaimed assets which could be used to fund the social economy.
“The previous Labour Government started a plan, which has been carried on by the coalition, to use money in dormant bank accounts," she said.
“There are other funds to which we could extend that idea, such as insurance, long-term investments and unclaimed gambling winnings.
"There is a lot more money out there that we could bring in. Instead of lying dormant and being wasted, it could be used to tackle some of our biggest social problems, so I ask the minister and my front bench team to consider that.”
Hurd welcomed the proposal.
“So much time was spent in setting up Big Society Capital and making the system work with the reclaim fund, that we did not have the time to start conversations about pursuing other assets, in particular in the insurance industry,” he said.
“They are there, so let us go for them. Let us start those conversations now, because that is money sitting on the table.”
Chi Onwurah, Labour MP for Newcastle Central and shadow social enterprise minister said the Labour party is considering extending the 2012 Public Services (Social Value) Act, which requires public bodies in England and Wales to consider how the services they commission and procure might improve the economic, social and environmental well-being of the area.
The Act currently only covers services, but Labour is considering extending it to cover the supply of goods as well.
“The 2012 Act builds on many achievements of the previous Government,” said Onwurah. “It is a real and symbolic step forward, and an important one, despite the fact that many worthy provisions were removed from it. We would have gone further with it; we tabled amendments to improve it. We would look to build on and extend the Act."
