A new report has suggested that social investment is “strongly associated” with decreasing deprivation and better economic productivity
The publication examined the impact of a government-backed Futurebuilders England social investment fund, which it described as “ground-breaking” for the time.
The Futurebuilders fund invested £142m into 406 charities and social enterprises in England between 2004 and 2010.
This combination of loans, grants and blended finance helped charities to “bid for, win and deliver public service contracts”, says the report.
The 12-page publication, by the Department for Culture, Media & Sport and Social Investment Business, was released last month.
The research adopted a “neighbourhood level analysis” approach, focusing on lower-layer super output areas in England, which are areas with populations of between 1,000 and 3,000.
It then compared the impact of the Futurebuilders investment on those LSOAs that had received it to those that had not.
The analysis found those areas that received more than £3m in Futurebuilders funding saw their deprivation levels improve by 12 per cent between 2010 and 2019 – and there was an improvement of 17 per cent during the same timeframe for areas that received more than £4m.
“Local areas that benefitted from FBE investment saw reductions in deprivation and higher economic productivity compared to surrounding non-FBE areas,” says the report.
But it notes that a “significant portion” of the funding went to the most deprived areas, adding: “The paper doesn’t fully establish the relationship between social investment and public service spending.”
The publication made similar positive conclusions about those areas which received the FBE investment when it came to their economic productivity.
Using gross value added – a measure for the value of goods and services produced in an area – the report calculated that the change in GVA was 14 per cent for areas that received more than £500,000 of the funding compared with those that received none.
This percentage increased to 42 per cent and 106 per cent in areas where more than £3m and £4m of FBE funding was invested, respectively.
“The analysis indicates that social investment is strongly associated with both improvements in deprivation levels and better economic productivity,” says the report’s conclusion.
“The findings don’t claim any causality. Instead, the research suggests meaningful correlations, by demonstrating that social investment is linked with positive changes in deprivation and economic productivity levels.”