Signatories including impact investors and sector organisations outline measures they say should be implemented to boost private investment targeting poverty in the UK.
UK social investors Big Society Capital and Big Issue Invest are among 36 organisations that have outlined proposals which they said could help direct up to £50bn (€58bn) of additional private investment towards driving growth and eliminating poverty across the country over the next decade.
In a letter published in the Financial Times today, the organisations called on the next UK government to provide more ways in which private investment can be harnessed for national good alongside government spending. Polls indicate the opposition Labour party is likely to win the election, which is expected to take place in late 2024.
The 34 other signatories include heads of impact investors and sector bodies including Snowball, Resonance, Bridges Outcomes, Nesta, Triodos Bank UK, Friends Provident Foundation and the Impact Investing Institute.
Nigel Kershaw, co-founder of Big Issue Invest, noted that government data showed over 13m people, or one in five of the UK population, currently live in poverty, of which nearly 4m do not have access to basics like shelter, food, clothing, or toiletries.
“It is time for our next government to focus on prevention, in order to remedy this unacceptable and worsening situation through more private as well as public investment,” Kershaw said in a comment on the letter.
The letter signatories called for the launch a national growth fund to attract pension capital and other institutional investment into critical economic sectors, as well as the establishment of a Local Community Growth Fund that would use current government spending to attract private investment into growth opportunities identified by communities around the UK.
The organisations also want to see the introduction of incentives to encourage banks, pension funds and foundations to invest for long-term sustainable and inclusive growth.
In particular, they said guidance on fiduciary duty should be revised to permit and encourage pension funds and other institutional investors to direct more of their assets into growth opportunities linked to social inclusion. The need to clarify the relationship between impact investing and the fiduciary duty of pension funds has been a hot topic in the UK over recent months.
Trusts and foundations should also be actively encouraged to invest a percentage of their assets in investments that encourage long-term economic and social value as well as a financial return, the organisations said.
Other proposals included the establishment of a Financial Inclusion Taskforce to improve financial inclusion and access to “fair” banking, plus what the letter signatories call smarter spending, in order to mobilise private investment to produce more cost-effective delivery of public services, such as medical care.
“Huge opportunity”
The organisations said these measures, if implemented, would not only enable economic growth and save money for taxpayers, but also benefit communities through, for example, job creation, keeping families together and improving the health of the most vulnerable.
Stephen Muers, Big Society Capital’s chief executive described UK public and private investment in these areas as “chronically low” as a share of GDP compared to competitor countries.
“There is a huge opportunity to channel more private as well as public money into investments which improve people’s lives across the UK and drive genuinely sustainable and inclusive growth, as well as delivering a financial return,” he said.
Although social investment may lag that seen in some countries, there is evidence of increasing appetite in the UK, which the signatories are hoping to build on. Big Society Capital reported in its most recent annual survey that the amount invested in tackling social issues rose to £9.4bn in 2022 from £7.9bn in 2021.
