Introduction: social impact investment and financialising social policy

Social impact investing (SII) is a mechanism by which governments seek to access and mobilise the resources of private for-profit and philanthropic capital to finance the pursuit and attainment of specific social and/or environmentally desirable outcomes, through various forms of investment activity (Social Impact Investment Taskforce, 2013: 1; HM Government 2014, 2016a, 2016b). This can include direct investment in charities and social enterprises; in funds geared to impact investing; in intermediary organisations that link potential financial investors with service providers in impact investment markets; or in the direct resourcing of SII interventions via new policy tools, such as Social Impact Bonds (SIBs) (Rosenman, 2019: 143–146). The focus of this chapter is on SIBs, which, as Whitfield (2015) has identified, are novel in that they do not require a wholesale transfer of a service between sectors – as under privatisation – or direction of public resources to a contracted service provider, as in public sector quasi-markets. Rather, an SIB is a variant of a payment by results (PbR) contracting agreement under which the state decides on the desired outcomes to be achieved to resolve a social problem, such as youth unemployment or homelessness and then contracts with providers to deliver these (OECD, 2015: 62–63; Wiggan, 2018).

Where an SIB differs from a standard PbR model is that neither the state nor the provider contracted to deliver a given service is responsible for providing the capital investment to get the service up and running. Instead this comes from a mix of for-profit and not-for-profit private investors who advance the resources to the provider on the basis they are repaid their investment and interest should programme outcomes be met (Whitfield, 2015: 7). The setting of outcome targets and the price the state is willing to pay for these are based upon a calculation of the future social and financial value these are expected to create. For example, in the case of a youth employability SIB this might be reductions in public spending estimated to arise from higher subsequent employment levels and fewer benefit claims over time. Like a PbR system an SIB concretises future value in the present (Esposito, 2011: 128) so as to enable value extraction prior to the material manifestation of value creation itself (that is participants entering and sustaining employment).