Extract from ‘Social impact bonds – what’s the problem?’
But what are SIBs for?
My main doubt is that SIBs are being used as a way to cut the public sector. The main argument in their favour seems to be that they bring in additional money to tackle social problems. But it seems to me that this is a self-fulfilling effect of limits on public-sector spending and borrowing: the government prohibits public authorities from borrowing and thus forces them to outsource. Central government is encouraging local authorities to issue SIBs by supplementing the return to investors – so yes it is paying private funds to do things it has made it impossible for public authorities to do.
If the argument is that investing in prevention is better than ineffective current expenditure on fire-fighting, then surely the answer is to allow public authorities to treat social issues as investment propositions. I don’t see that should be conflated with privatising their delivery.
There may of course be a different argument for that – that involving the third sector brings in new ideas and a closer understanding of the problems and the clients – but rewarding investors seems to be a red herring.
It may be that the ‘problem’ that social impact bonds are tackling isn’t social at all, but neoliberal-macroeconomic – to do with the size of the public sector.