Iain Duncan Smith gave a speech at the Social Investment Conference last week discussing how Social Impact Bonds are “transforming the whole culture of public spending”. These bonds are the latest way to funnel tax payer’s money into the private sector by allowing investment companies to hand out contracts to run public services on a payment by results model.
The way it works is simple. A bunch of city spivs and social enterprise bosses get together and decide they can fix a social problem such as street homelessness. A list of ‘outcomes’ are drawn up, such as the number of homeless people they think can place in accommodation and the government agrees to give them lots of our money if they are successful. The spivs then either lend or provide the upfront funding whilst all the social enterprise has to do is cook the books and make sure that these outcomes appear to be achieved. If they are then the spivs get a juicy return on their initial investment.
According to Iain Duncan Smith a pilot scheme based on this funding model has already helped to cut rough sleeping in London by 30%. This is a boringly transparent lie, street homelessness in London has almost doubled under this Government. What he was referring to was a project run by two charities, St Mungos and Thamesreach, which focussed on 831 ‘entrenched’ rough sleepers*. The most recent evaluation of the scheme says that one of these charities failed to meet their target to reduce rough sleeping and that performance overall was ‘mixed’.
On the Work Programme the payment by results model has led to perverse results, such as those who are most in need of help being ‘parked’, or abandoned, because they are not deemed profitable. The ruthless benefit sanctions required to underpin the scheme, as no-one would volunteer for such a shoddy service, have led to desperate suffering. The impact on long term unemployment has been virtually non-existent – the latest figures show that those who have been on the programme for two years are slightly less likely to have had a spell in work than if no scheme had existed.
This is the type of funding model that Iain Duncan Smith wants to introduce across public services, except instead of being in hock to the government then service providers will owe a debt to shadowy investment cartels. These are not people who care about public services, all they care about is money, in fact that is the point. The neo-liberal belief that greed is good means that greed should be introduced into every sector of our lives from social care to healthcare to education. What they don’t seem to understand about greed – or perhaps they do and don’t care – is that the instinct of the greedy is to do the least possible work for the most possible money. If it is easier to cook the books than achieve genuine outcomes then that is what they will do. If people are damaged in the process they don’t care. If actions taken today lead to a greater cost tomorrow then that is not their problem. To allow this culture to take hold in public services is a toxic recipe for corruption and cost-cutting at the expense of care.
There should be no doubt in the scale of Iain Duncan Smith’s ambition. At his speech last week he announced that the ‘first trillion’ of potential investment money had been identified, adding ominously “that’s what it cost to deliver our health and education systems for the last 5 years.” Remember that. This Government wants to privatise everything. And so will the next one whoever is elected. Social Impact Bonds were yet another Labour invention that Iain Duncan Smith has claimed as his own.
*Amusingly this is more rough sleepers than actually exist in London according to the latest figures from the Department of Communities and Local Government which claim only 742 people are currently sleeping on the streets in the capital. This disparity comes from the annual street count, which is widely believed to be fixed and shows just how easy it is to generate any so-called ‘outcome’ you want even when there is no profit motive involved.
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