It is fair to say that as SIBs developed within and beyond the UK, there has been a constant process of adaptation. Each country has had to do a considerable amount of ‘translation’ to enable the model to be implemented in its particular national, regional and local context.
Japan, similarly, is trying to figure out an appropriate form of SIB that suits its unique socio-political, economic, and cultural milieu. For example, voluntary sector organisations tend to be small and hyper-local; there is a lack of participative governance in terms of the structure of central and local government relationships; and despite the huge national debt the government has no problems accessing cheap capital.
It is therefore naïve, and frankly wrong, to think that there is a singular SIB model that can be transposed with ease.
What might help?
Japan, drawing lessons from the UK, recognised the importance of stimulating the development of a social investment market. Taking a lead from the model set by the UK in creating Big Society Capital (BSC), Japan recently passed the Dormant Bank Account Act whereby a portion of the money will be transferred to a foundation independent from government who will act as a wholesaler (like BSC) in which money is lent or invested in social investment intermediary institutions who go on to invest in frontline social sector organisations. There is also interest in setting up impact bond funds, akin to the ones in the UK.
However, it is not sufficient if governments only see their role in terms of providing the money either to pay for outcomes or to grow the social investment market. In Japan, we hear that the pilots have struggled with being able to identify the right outcome metrics and being able to conduct measurement consistently and robustly. This area seems under-developed in comparison with the UK where the government has invested significantly in developing the evidence base for outcome measurement and for pricing outcomes.
The UK government has also set up the Government Outcomes Lab: a partnership with the Blavatnik School of Government at the University of Oxford, to support commissioners to better engage with outcomes contracting.
There has been legislative change that support development in this area. For example, the social investment tax relief aims to attract individual social investors, complementing Big Society Capital’s effort at growing the market of institutional investors. The Public Services (Social Value) Act additionally requires public bodies in England and Wales to give due consideration to improving local economic, social and environmental outcomes through commissioning.
I will be encouraging participants at the Social Impact Forum at Yokohama City on 22 April 2017 to consider the specific forms of support that should be put in place, and who might be responsible for doing what, to enable SIBs and social investment more generally to flourish in Japan, and in ways that truly bring about social outcomes.
Dr Chih Hoong Sin, Director, Innovation and Social Investment