A long-term anti-poverty fund created during the government of Tony Blair doubled the economic output of some local areas and improved deprivation levels by up to 17%.
The Futurebuilders England Fund gave £142m in loans and other financing to 406 charities and enterprises in England from 2004 to 2010.
New research into the long-term effect of the fund by the Department for Digital, Culture, Media and Sport (DCMS) and Social Investment Business (SIB), which managed Futurebuilders, shows that the places where organisations received money did better than neighbouring areas.
Using hyperlocal data from the Office for National Statistics, the researchers compared areas of 1,000 to 3,000 people where social investment was spent with similar neighbourhoods close by.
In places where a charity or enterprise received £3m, the average improvement in deprivation from 2010 to 2019 was 12% compared to neighbouring areas. If £4m was spent, deprivation improved by 17%.
The researchers also examined gross value added (GVA) – the value of goods and services, less the cost of producing them – and found that in places where more than £500,000 was invested, there was a 14% improvement. Where £4m was spent, GVA went up by 106% by 2019.
Nick Temple, chief executive of SIB, said that most of the loans had been repaid. “At the time, it was viewed as quite risky because these were charities and social enterprises that no one else would lend to, primarily in the most disadvantaged areas of the UK,” he said. “It returns money to the government because the organisations have paid back over £100m of that loan. The organisations have created more jobs, they’re in a stronger position in terms of their finances, and it’s really having an impact on their communities.”
Very few government funds run for longer than two or three years since new funds garner more headlines.
“This should be music to the ears of policymakers – it’s very rare to have this 20-year or 15-year view of these sorts of investments,” Temple said. Charities that have paid back funding have also been able to approach banks that have previously refused to lend to them, he added.
Projects backed by Futurebuilders England include Save the Family in Chester, which supports vulnerable homeless families. It was able to expand its site after receiving a £2.5m loan and £1.4m grant, to include more homes, a children’s centre and other facilities, and is close to paying back the whole of the loan. The Women’s Organisation, which supports and trains women in Liverpool to create businesses, was able to buy new headquarters with space to develop new businesses. It has now helped more than 60,000 women create more than 4,000 businesses.
Stuart Andrew, the civil society minister, said: “Social investment is hugely important in reducing deprivation and is a key part of our levelling up agenda. Research such as this helps us to better understand and reach out to the most disadvantaged communities, particularly when informing future funding decisions.”