– Social impact bonds should fund under-resourced government programmes – revolutionising public services and saving taxpayers billions in cash
– New report details how investment firms can help drug addicts, vulnerable youths in care and end of life cancer patients
Investment from big banks and other private firms could slash drug addiction, and revolutionise public services, according to a new report “Capital Investment”.
Known as ‘Social Impact Bonds’, they encourage charities and social enterprises to come up with innovative ideas to address social problems. The government identifies the cost of the problems, and investors front the cash to solve them. Taxpayers save money, investors are paid on results, and social problems are addressed innovatively.
There are an estimated 62,000 crack and opiate addicts in London.¹ Even if a new city-wide programme could cut the number of users by half, it would reduce pressure on public services and save the taxpayer about £4.7bn² over the drug-users’ life time.
Report author, GLA Conservative Assembly Member James Cleverly, said:
“There are innovators out there right now with real solutions to society’s problems. These big ideas not only prevent suffering – they proactively address problems early on, saving money in the long run. We need to connect these innovators with the big budgets they require, and this can be done with Social Impact Bonds. These programmes will bring on investors who believe in the best new ideas to help our citizens, and have them front the cash needed.”
“For instance, a charity has a new proven idea to cut drug use and prevent the most vulnerable from becoming addicts. The government calculates the long term costs of drug addiction on society, which can be upwards of £150k per drug-user. An investor who believes in the charity’s new preventative idea provides the needed funds, and the government agrees to give a portion of the long-term savings to the investor, if the outcomes are met. If we could treat even half of London’s 62,000 drug users, we could not only better those lives, we could save about £4.7bn over their lifetimes.”
Social Impact Bonds have the potential to tackle many different social problems in London.
· A future bond, working to reduce the number of kids in care, could help up to 10,000 children while saving £0.4bn.³
· A programme, to improve end of life care for cancer patients, could deliver savings of approximately £16.9m per annum.4
London is currently not meeting its fast growing social investment needs.5 If the Capital uses Social Impact Bonds to bridge this funding gap it would contribute another £3.6bn to the economy, supporting 200,000 full time jobs over a three year investment period.6
The report, ‘Capital Investment: Private finance for social problems’ can be accessed at: www.glaconservatives.co.uk/ci
Or to save it right click 'save as' on this link www.glaconservatives.co.uk/ci
• New Social Impact Bond could save taxpayers up to £22bn – CityAM
• 'Big banks’ £billions could cure over 30,000 crack addicts' – 24Dash
• James Cleverly MLA: Social Impact Bonds mean big business can boost the Big Society – ConservativeHome
¹ http://www.hscic.gov.uk/catalogue/PUB12994/drug-misu-eng-2013-rep.pdf, p. 16.
² Expert consultancy ‘Social Finance’ estimates that the cost of OCU to government is £150,000 per user over their drug use life time. There are 62,000 opiate and crack users in London costing £9.4bn. If half the number of users were helped, it would save the taxpayer £4.7085bn.
³ Data from https://www.gov.uk/government/statistics/children-looked-after-in-england-including-adoption and http://www.socialfinance.org.uk/impact/young-people/ shows that the cost of caring for a child is £40,000, costing £0.4bn for 10,000 children.
4 A programme would save £500 per person according to Marie Curie. https://www.mariecurie.org.uk/commissioning-our-services/why-marie-curie/impact. There are 52,000 deaths in London per annum. Of this, 79% are over 65. 17.6% die at home. Therefore, 33,849 Londoners die away from home, costing £16.9m.
5 Predictions of the current shortfall in UK social investment vary from £300m to as much as £1bn a year – 19% of this exists in London.
6 The UK social investment market is worth £750m. If you add the gap in demand , this equals upwards of £1.75bn. London represents 19% of the total market equalling £142m as current market size and £190m of gap in demand (totalling £332m). The report states that for every £10k of social investment, £110K GVA (gross value added) is generated, which supports 6 full time equivalent jobs. Therefore, the London market is worth £3.652bn GVA and 199,200 jobs