Why it's smart policy and smart politics for the Labour government to engage with social innovation and experiment

It’s no secret that Labour’s focus on campaigning sometimes came at the expense of attention to policy or preparation for government.   Here I mention one of the gaps which I hope gets some attention over the next few months as the government finds its feet.  It is the absence of policies or thinking on social innovation or social experiment: how to discover better ways of solving the many acute social challenges the UK faces.  

There are obvious policy and political reasons why this should matter to Labour and why it’s become increasingly important  for centre-left governments.  There is little point having furious innovation in science and technology if our societies stagnate.  Hence the argument that energetic innovation and experiment is as important for care for the elderly, recycling, neighbourhood design, mental health, childhood support and homelessness as it is for electric vehicles and AI chips.  

Over the last 20 years a lively field of social innovation has grown up around the world – straddling everything from microcredit to maker spaces, social investment and participatory democracy to randomised control trials in education.  As a result, there are now many more examples, models, policies, networks and research studies to guide action than there were when Labour was last in power.  So far, however, there is little sign of these ideas in Labour’s thinking or in its actions.  Five factors may explain the current blockage.

The first is the absence of a broader vision to fit them into – ideas on where Britain might get to and how to get there after say 10 or 15 years of Labour government.  Is it just more growth? Fixed infrastructures? More homes?  These are not bad aspirations!  But the rhetoric of missions can sound like government just doing things to or for people not with them. And all of the missions will in practice depend on both technological and social innovation, since there are often no proven interventions just waiting to be put into practice.  Instead governments, and society, have to explore and experiment, learning by doing.   Many MPs recognise this - and also understand that the politics works much better if the missions become tasks for the whole of society – mobilising social intelligence in all its forms – and not just a task for (hopefully) competent technocrats in Whitehall.  They know that the old model - where government delivers and a grateful public thanks them - no longer works if it ever did. 

The second issue follows from this.  Labour has yet to work out its stance on civil society and the third sector in general, even though many Labour MPs have impressive civil society backgrounds.  We’ve heard much about  business, and even appointments of a few business lobbyists into government (which in my view is quite risky, but that’s a topic for another day).  By contrast civil society has largely disappeared from the radar.   The last few governments had many funds to help civil society innovate and imagine in all sorts of ways (I list a few of them at the end of this piece).  Now there are almost none, and precious little sense of what governments wants its relationship with civil society to be.

The third is a blind-spot in science and innovation policy.  The UK spends well over £14bn of public money on R&D.  But this is now almost entirely devoted to science and tech: AI, materials, pharmaceuticals and aerospace. There is next to nothing for social R&D.   The top jobs in innovation – science minister and Chief Scientific Adviser, as well as important influencing roles like President of the Royal Society - are now held by the biomedical world.  The life sciences do wonderful things, and the individuals in those jobs are admirable.  But they have shown little interest in, or knowledge of, social change.  I’m in favour of generous spending for R&D, but I have never seen a coherent argument for why this should only be for hardware, and never for social ideas.  Dementia is one of many fields which shows why this is foolish.  Billions have been spent trying to find pharmaceutical cures for dementia with, still, very disappointing results.  Far less has been spent on other solutions – from training up shopkeepers on how to spot and help people with dementia and mutual support clubs to dementia villages and imaginative uses of virtual reality (I’ll shortly be publishing a piece which documents many of these).  Getting a more balanced approach should be quite easy for Labour. But I’m not sure it’s even recognised as a problem (and the dominance of biomedical means that even quite well-informed people are unaware that the sector has faced fifty years of declining productivity, with ever fewer useful drugs for each billion of spending, sometimes called ‘EROOMs’ law because it looks like the opposite of Moore’s law in digital).

The fourth reason, is more technical: the lack of any funding for exploratory social science or design.   Funding for social science comes through the Economic and Social Research Council (ESRC) and there are many examples of excellent research that it’s supported which are relevant to the government’s priorities.  But the ESRC, and social science more generally, have steered clear of working on prescription or design in recent decades.  Other fields assume that the best academics don’t just analyse but also create: this is obvious in engineering, medicine, computer science and other fields. But in social science it is impossible to get funding for anything too creative – for example, ideas on how a national care system might work, or what schooling could be in 2040, or the dynamics of a zero waste economy.   The ESRC spends a lot, and rightly, on synthesising evidence about what works.  But it’s constrained from spending on generating the ideas that could be evidence in the future, and it's not helped by universities which have largely given up on social exploration and innovation – most serious work of design now happens outside them.  Again, this is something that Labour ministers could fix – but they first need to recognise that there is a problem.

Finally, there is a structural issue: it’s not clear whose job it is to tackle this.  Is it DSIT?  DHCLG?   DCMS?  Or does government need some more cross-cutting capability, probably based in the Cabinet Office to kickstart action?  Previous governments often found that some central drive was usually necessary – whether from No10, Cabinet Office or the Treasury and I suspect this will be true once again.  But it’s not yet clear who at the centre has the bandwidth to grasp more strategic issues like this.

Labour is already being criticised for its karaoke tendencies – singing other people’s songs, and not always that well, whether on deregulation or growth.   Social innovation is a space  where Labour could offer a much more distinctive diagnosis and prescription.

The UK remains extraordinarily rich in social innovation and entrepreneurship, community enthusiasm and creativity.  I spend a fair amount of time with frontline staff and community groups and am always amazed at how much good sense there is on the ground, and how rarely that is tapped into by decision-makers at the top.   

At the moment there is little overlap between their world and the worlds of government and policy, of highly paid business lobbyists and glitzy summits.  Over the next few months, although money is very tight, serious work needs to be done to put that right – as this is a space where good policy and good politics go very much hand in hand.

A few of the funds that backed social innovations in the UK over the last 20 years:

Futurebuilders Fund (2004) A £215 million fund launched in 2004 to provide loan financing to charities, social enterprises, and voluntary organizations to deliver public services. A key Labour initiative to increase the capacity of the third sector.

Inclusive Economy Partnership (2017)– linking government, business and civil society and providing funding for social innovations in finance, jobs and mental health

Social Enterprise Investment Fund (SEIF) (2007)  Created to provide financial support to social enterprises working in the health and social care sectors. The Department of Health launched this fund to stimulate growth in these sectors.

Adventure Capital Fund (2002) A fund set up to support the development and scaling of community enterprises. The fund aimed to build sustainable organizations that could deliver long-term social benefits.

Capacitybuilders (2006) This program provided funding to third-sector organizations to help them build capacity and improve their ability to deliver services. It was part of a broader strategy to strengthen the infrastructure of the voluntary sector.

Big Society Capital (2012)  Initiated by Labour and then followed through by the Conservatives, this £600 million institution was created to support social investment in the UK. It primarily channels capital into social enterprises and charities through intermediaries.

Social Outcomes Fund (2012) A £20 million fund managed by the Cabinet Office to support Social Impact Bonds (SIBs). The fund was designed to help address complex social challenges by paying for successful outcomes rather than inputs.

The Life Chances Fund (2016) A £80 million fund supporting locally developed SIBs designed to tackle social problems, especially in areas like children’s services, health and employment. It built on the earlier Social Outcomes Fund.

Access – The Foundation for Social Investment (2015) A £100 million endowment-backed organization created to support charities and social enterprises in accessing investment. It focused on smaller, more impact-driven organizations.

Innovation Fund (2011)  This was a £30 million initiative by the Department for Work and Pensions, designed to address youth unemployment. It aimed to fund social impact bond models to get young people into work or training.

Big Lottery Fund (2004), rebranded as The National Lottery Community Fund

Throughout the Labour and Conservative periods, a significant source of financing for community-led and social innovation projects (total spend around £500m a year)

Dormant Assets Scheme (2020) Expanded under the Conservative government, this initiative unlocks dormant financial assets from banks and other financial institutions to be reinvested in social and environmental causes. A significant portion of this funding goes toward supporting social enterprises.

UnLtd (2002) a £100m endowment for supporting social entrepreneurs

Youth Endowment Fund (2019) A £200 million fund designed to support efforts to prevent youth violence and tackle the root causes of crime through innovation and research-backed interventions.

Nesta (1998) A £400m endowment that has funded many social innovations as well as running social impact investment funds