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Big Society Capital recently published their Justice Market Statement , setting out social investment options for primes and tier 1 and 2 providers interested in getting involved in the Transforming Rehabilitation procurement process. This is expected to kick off over the next couple of weeks, so we were interested to explore their ideas for supporting market engagement and participation.
In general, their Statement is short and sweet. However, one thing really caught our eye – as a ‘wholesaler’, BSC is only able to invest in ‘intermediaries’. This normally refers to social investment specialists such as Big Issue Invest and CAF Venturesome, but their current definition is pretty vague: ‘organisations that sub-contract at least 50% of contract value to social sector organisations’ and ‘organisations that provide a range of services (e.g. performance management, contract management, negotiation support) for subcontractor social sector organisations’. Does this mean that, in principle, private sector primes could be backed by social investors?
We think that this relatively wide definition presents an excellent opportunity for new consortia and social primes to emerge as intermediaries, cutting out ‘middle man’ costs and additional rates of return on investment which we know to be prohibitive to organisations considering social investment. It could (and in our opinion, should) introduce a greater level of delivery-based expertise and operational understanding into the social investment market. Something that is sorely lacking right now. This can only be a good thing.
What are the other implications of BSC potentially opening up the market to new kinds of intermediary? Should private sector primes be able to access social investment if it is going to flow down into the smaller organisations that actually need it, or should they be willing to invest the required levels of capital directly? Let us know your take, via Contact Us, or get in touch directly.