How the ‘Big Society’ Commodified Poor People

How the ‘Big Society’ Commodified Poor People

TJ Coles inspects how David Cameron’s widely-scorned idea ended up institutionalising a smaller state

In the words of the Institute for Fiscal Studies, the austerity imposed on the British public after the financial crisis by successive governments was “a political choice” not an economic necessity. It gave the Conservatives an opportunity to forge ahead with their privatisation agenda, shrinking the size of the state.

Austerity consequently forced public service providers to invent novel ways of raising cash, one of which was the social impact bond (SIB) – a relatively new financial instrument that ends up using destitute people as an investment opportunity.

SIBs are now used in prisons, shelters and childcare services. They have inadvertently contributed to the normalisation of charity as a means of replacing state services.

A SIB is a ‘payment-by-results’ financial instrument that relies on volunteers and the community sector to complete work that central or local government would normally undertake. If a homeless charity, for instance, can convince funders that it will get a certain number of people off the streets, it will be financed to do so.

Investors agree to fund social programmes on the condition that the given charity achieves its goals. The Government or local authority (i.e. the taxpayer) then reimburses the investor for the work done by volunteers. However, the investor is only paid a return if the project is successful – if the scheme doesn’t work, they lose the investment.

The SIB market – pioneered in the UK but also in existence in the US – is now worth some $1 billion. In Britain alone, the wider and related ‘social investment market’ – which sees business opportunities in social care, weight loss and mental health – is worth more than £5 billion. An even wider definition that includes environmental management – the so-called ‘impact investment markets’ – is now worth half a trillion dollars, globally.

The first SIBs were designed in 2008 during the financial crisis under the New Labour Government. The city of Peterborough piloted Britain’s first SIB in 2010 – worth £5 million – the year in which the Conservative-led Coalition Government came to power.

The National Probation Service was arguing that cuts to its budget had led to a crisis in the sector. The social cost was that offenders had no post-jail guidance and were therefore more prone to reoffend. The SIB pilot sought to tackle recidivism in HMP Peterborough by using charities to undertake the work of probation officers.

In 2010, the Ministry of Justice paid the defence contractor QinetiQ (privatised by New Labour) and the University of Leicester to study the outcomes of the Peterborough SIB. Four years later, they concluded that the percentage of reoffenders was “insufficient to trigger payment for the first cohort”.

As the Peterborough SIB agenda was being hammered out, the Coalition Government announced the imposition of austerity. From 2010 to 2015, 9% of central government departmental spending was cut. In London alone, real-term funding to local authorities was reduced by more than 60% in the decade up to 2020.

In parallel, then Prime Minister David Cameron launched his ‘Big Society’ initiative – a broad slogan essentially encouraging ‘civil society’ to fill in the gaps created by a shrinking state. It was accused of being ‘a cover for austerity’ that shifted responsibility onto communities while simultaneously cutting local budgets.

Cameron said that, in an ideal society, people “don’t always turn to officials, local authorities or central government for answers to the problems they face”.

More recently, Home Secretary Priti Patel remarked that people are always blaming government – those who make laws and manage our budgets and taxes – for the existence of poverty.

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A Profit Opportunity

In 2011, the House of Commons Public Administration Select Committee’s report on the Big Society largely focused on SIBs, suggesting that they formed the backbone of the agenda.

Money for SIBs and other pay-by-results initiatives, was mainly raised through the Big Society Capital (BSC) – a financial institution now investing £1.9 billion via pooled funds in social investment markets.

BSC’s investors include several huge investment firms: Bridges Fund Management, CBRE, Nesta, Rathbones, Resonance Asset Management, and Schroders.

By 2018, there were an estimated 40 SIB projects across the UK, covering a wide variety of public policy areas.

Launched in 2014, the Children’s Social Care Innovation Programme introduced SIBs to the sector. By 2018, there were an estimated 389,000 children in need of intervention and/or protection in England alone (the figure is closer to 800,000 when other factors are considered).

Intervention and protection usually fall into two categories: safeguarding (such as putting children into care) and non-safeguarding (through early intervention, for instance, through Sure Start centres). By 2015, child social care budgets had been cut by up to 45%.

SIBs sought to remedy the fall-out: Birmingham City Council’s ‘Step-Down’ programme sought to find foster homes for children in residential care, while the UK-wide ‘It’s All About Me’ campaign sought adoption for hard-to-place children.

SIBs have also been used as a means of addressing rough sleeping. However, a Department for Communities and Local Government report published in 2017 noted that after three years of using SIBs to try to help vulnerable people in London into sheltered accommodation, “targets were largely not met and performance against the [more positive] metric tailed off during the third year”.

While still claiming that the NHS will always be free at the point of use, successive Conservative governments have fragmented and privatised the system. SIBs are another method of achieving this goal.

By 2015, social care funding had been slashed by a third. Notoriously, this contributed to 120,000 excess deaths by 2017 in England alone. In addition to foster care and homelessness services, a series of England-wide SIBs called ‘Trailblazers’, sought to plug NHS funding gaps. 

A Policy Innovation Research Unit report concluded that “in four of the five Trailblazers, there was no outcome analysis against a counterfactual, thus it was impossible to judge robustly whether the outcomes achieved were a product of the SIB-financed intervention or not”.

We cannot say that SIBs alone have perpetuated the undermining of public services under the cover of austerity, but it is evident that these novel financial instruments have inadvertently justified the weakening of the role of government – and local spending on the most vulnerable. They have arguably marketised the destitute; turning them into an investment opportunity for global funds with little stake in the common good.