Can social investment help the nation’s poorest students?
Last month saw the launch of a major research project on the role of social investment in reducing the educational attainment gap amongst disadvantaged pupils. The research was commissioned by us (Private Equity Foundation) and Big Society Capital and authored by the Young Foundation. It calls for social investment to be used to develop and deliver programmes with greater impact.
We are an investor and social intermediary. Our ThinkForward programme was one of the first social impact bonds (SIBs) designed to prevent young people from becoming NEET. Having experience of developing a SIB and now receiving the first payments via the payment-by-results commissioning structure, we were delighted to co-commission this research to better understand the size and scope of the market and identify areas ripe for social investment.
Following the G8 Summit’s focus on social investment and a clear appetite amongst commissioners and investors to know more, a report of this nature was timely. Internationally the UK is seen as a leader in the social investment market, yet locally our conversations with investors and other social intermediaries highlighted the need for a more thorough understanding of the size and the scope of the market opportunity.
The attainment gap within the existing education is widening, many young people are still leaving school without the qualifications and skills they require to become active members of the labour market, despite huge amounts of funding from government focused on this very issue.
Our desire is that the research will act as a call to action – to headteachers, local authorities, central government, potential commissioners, social investors and intermediaries and social enterprises – to develop a shared understanding of what works, what could scale, and then to make it work, or as the report calls it; “efficacy, marketability and investability”. We owe it to the young people who are being left behind to examine all possible options – including social investment.
The report focuses on pupils aged 5 to 18 years in mainstream education and highlights three potential areas for short and longer-term investment, which have a combination of a growing demand and both social and financial scale. They are:
Post-16 vocational education – The rise in the school leaving age is creating demand of 50,000-100,000 new places, which come with associated funding. The sector is relatively open with charitable and commercial providers able to set up. The post-16 education system often fails students, entering them for qualifications with little labour market value and providing courses that do not match local labour market demands. The report argues that this market is ripe for new innovative providers to move in and with the one-off rise in demand over the next two years, the timing is right.
Social impact bonds (SIBs) – The £30m DWP Innovation Fund, which is the largest example of this sort of funding in the world, have been widely praised by commissioners and investors. Programmes such as ThinkForward, which was an early adopter of the model, is beginning to show results and the evidence base is building. If SIBs can generate enough of a saving to pay for themselves, they could be a very large market. The report calls on the government to continue to invest – and larger sums than previously – in developing this market with educational attainment as a focus.
The pupil premium – Last month the government’s spending review confirmed the pupil premium is here to stay. Pressure is mounting for schools to prove that they are using the money effectively to narrow the attainment gap – Ofsted is measuring this and league tables of results are being published. Our desire is to see the £2.5bn a year pupil premium being spent effectively to raise the attainment gap through utilising social enterprises with proven and effective ways of engaging and supporting disadvantaged young people. A powerful partnership would be for grantmaking trusts and foundations to work in collaboration with social investors to enable the best interventions to scale their operations to transform the attainment outcomes of many more young people.
Although the social investment market is in its early stages, it is growing – and as seen at the reports launch event there is a huge appetite to make this work. Our hope as an investor and a social intermediary helping charities and social enterprises to become investment-ready, is that this report will be a catalyst for action – bringing together organisations with proven interventions, commissioners, investors and social intermediaries in the shared aim of raising the achievement and narrowing the attainment gap of some of the most disadvantaged young people in the UK.
This article previously appeared in the Civil Society blog.