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Charities and social enterprises play a vital role in the justice sector through their commitment to reducing reoffending and improving communities. Big Society Capital (BSC) believes the forthcoming reforms to probation services could present a significant opportunity for social sector organisations (SSOs) to do even more in rehabilitating offenders and reducing reoffending.

To enable SSOs to fully seize this opportunity, we encourage the reforms to have two principles at their heart: first, the commercial proposition must genuinely incentivise rehabilitation; second, goodsupply chain behaviour must be articulated and enforced. These principles are expanded on in our recent consultation response to the Ministry of Justice (MoJ). If these principles are upheld, BSC stands ready to help social sector organisations play a significant role in the reforms by improving access to appropriate capital.

We believe we can do this in at least two ways:

  1. Financing social primes - We hope that we will see one or more SSOs take a role at the prime contract level. This may involve large SSOs bidding independently, or in partnership with private providers and/or probation service spin-outs. Whilst BSC investment can only be deployed to support SSOs through intermediary vehicles, we look forward to seeing collaborations that bring together the best of the private, public and social sectors. Where SSOs are considering bidding for a prime contract, BSC would welcome early discussions with bidders to explore the potential role of social investment. Please contact us if you are from a SSO considering bidding as a prime or as part of consortium, and would like an early, exploratory conversation.
  2. Providing working capital to subcontractors - BSC also recognises the important role of SSOs at the subcontractor level in providing specialised services with a deep understanding of local needs. Depending on the overall programme design, SSOs at the subcontractor level may bear outcomes risk and require access to risk capital. Other subcontractors may not bear outcomes risk, but may still require capital to scale their operations or invest in infrastructure. To support these financing needs, BSC is looking at creating a working capital facility (in addition to the existing Results Fund) to help fund SSOs deliver subcontracts. Again, please contact us if you are a finance company interesting in collaborating with us to create and operate such a facility.

Over the coming weeks and months we look forward to continuing an open dialogue with MoJ and hearing from potential SSO prime contractors that are interested in exploring social investment. BSC will continue to update the market on our role in the reforms as details of the programme design are released.

Last updated | 
21 March 2013