The Mythology of the Social Impact Bond: A Critical Assessment from a Concerned Observer

Abstract

Social Impact Bonds (SIBs) entered public political discourse in the UK in 2007. Many of their original claims - that they represent a bipartisan approach, generate public sector savings, promote innovation, and transfer risk from the public sector - have little basis in evidence so far produced. These are "myths of SIBs." This contribution explores four myths about SIBs, based on claims by SIB proponents - usually financial intermediaries and potential deliverers with vested interests in their success. Recent detailed evaluations and assessments show that a more cautious approach is needed before further expansion of SIBs and their funding takes place. Against considerable previous theoretical unpinning claimed by SIB proponents for these models, this contribution seeks to rectify serious omissions of public policy discourse, including analytical and theoretical literature, as a starting point for the relocation and reclamation of previous roles and territories for public service delivery. This article also presents detailed evidence on substantial funding from Government Departments, the UK National Lottery, and dormant bank accounts to support SIBs, the total of which amounts to more in subsidies for SIBs than the actual investment attracted from private investors. The conclusion is that it may be easier and even cheaper for public administrations directly to finance social programmes.