Better schools for the disadvantaged – can social investment help? | Big Society Capital

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Better schools for the disadvantaged – can social investment help?

Social issue | 

Far too many children educated outside mainstream schools are failed by the system. Our Head of Strategy Stephen Muers looks at a new report that highlights social investment could be part of the solution

The Centre for Social Justice (CSJ) has just published its report “Providing the Alternative”. It issues a clear call for a drive to improve education for children who are excluded from mainstream schools. Many of these children go into what is known as “alternative provision” (AP) – specialist centres for those whose needs cannot be accommodated in the mainstream. The overall outcomes for children in AP are shocking: in 2015/16 only 1.1% of them achieved 5+ GCSEs at A*-C including Maths and English.

Some AP centres deliver an outstanding service. However in many parts of the country there are simply not enough good AP places. For example, the CSJ report shows that there are no AP places rated “outstanding” by Ofsted in the North East of England. In some parts of the country over a third are rated either “requires improvement” or “inadequate”. There is a need to establish more high quality AP for the children in these areas.

The Department for Education (DfE) could simply use grant funding to pay for new places, which it has done successfully in the past. However this leaves the taxpayer carrying the risk of paying for new provision that doesn’t deliver a good service, and requires up-front capital. To cover this risk the DfE will, naturally, tend to specify in detail what it wants. Such specification in turn cuts down the scope for innovation and learning.

The CSJ report proposes another option, an AP Improvement Investment Fund. This would be a partnership with the third sector and social investors. DfE would make a long-term commitment to pay a set sum per AP pupil in the areas where new AP is needed, crucially tying this payment to meeting a pre-agreed outcome standard. Social investors would put money into the Fund to back third sector providers who were able to create such provision, giving those providers a stable financial position and the scope to innovate. By transferring risk to investors, central government would have less need to manage inputs tightly and specify the detail of how new provision would work.

This proposal is a good example of a different way to create new public service institutions. Government would focus on the outcomes it wants to promote and make a long term commitment to pay for them. Many outcome-based contracts so far have been short-term, and do not give the scale and stability needed to build whole new service delivery institutions.

Long-term commitments can challenge governments because public spending is only planned a few years ahead. However they are not impossible. Local authorities often commit to contracts of 15 years or more for waste facilities. If we can manage this for treating waste, why not for treating the most vulnerable children?

We at Big Society Capital believe that social investment can help unlock opportunities for the third sector to work in long-term partnership with government. If you’re keen to discuss the CSJ’s proposals around AP, or other similar opportunities, please get in touch with me at:

Last updated | 
23 July 2018

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