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Exploring how social and public innovation can build a more inclusive economy

This blog was written by Nihad Ahmed (Research and Policy Intern, Nesta) and Sophie Reynolds (Senior Researcher, Nesta).


How can public and social innovation help build a more inclusive economy? On 27 January,  Social Innovation Community partner Nesta joined forces with another European Commission project, CrESSI (Creating Economic Space for Social Innovation, led by University of Oxford)  to lead an event on this issue. Comprising of a presentation by the  CrESSI team, a panel discussion, and a participatory workshop, the event brought together almost 80 participants from different sectors and areas of work - from civil servants and local government policy advisors to researchers and social innovators.

Interest and awareness in inclusive economy as a concept has grown over the years for a number of reasons: while unemployment levels have improved since the years following the financial crisis, they still present a persistent challenge for most economies. Likewise, the issue of ‘runaway inequality’ has also been a growing concern - with organisations like Oxfam producing damning reports on the effects this is having on the world’s poorest.

Questions of how to create a more inclusive economy are cross-cutting. Strategies to foster a more inclusive economy have emerged transnationally - taking a central position in both the EU’s ‘Europe 2020 Strategy’ and the UN’s Sustainable Development Goals. National governments are also playing their part too. In October 2016, for example, the UK government established a new Inclusive Economy Unit, which aims to achieve its goals by combining the expertise of the public, private and civil society sectors.

Learning from international examples of social innovation policy

Based on their recent policy paper, the CrESSI team presented three international examples of how social innovation policy has been used to tackle marginalisation in Europe:

Finland’s PAAVO Housing Programme sought to change the way long-term homelessness is understood and tackled. Unlike the typical 'staircase model' approach to tackling homelessness - where a person must first demonstrate they are ready to be ‘rehabilitated’ before accessing accommodation - PAAVO adopted a principle of ‘Housing First’. Guided by this principle, the Finnish government a) embedded user needs across Finnish homelessness prevention policy, welfare and health service and b) created new networks of support, finance and service provision to address the challenges faced by the private, public and third sector in addressing homelessness.

Social Impact Bonds (SIBs) in the UK are payment-by-results contracts which use private social investment to ‘de-risk’ public service experimentation. Particular SIBs have focused on preventative service interventions that can for example reduce youth unemployment, improve outcomes for children in care or tackle homelessness. CrESSI’s study found that SIBs have had mixed results - while the focus on outcomes has helped strengthen the responsiveness of some welfare service provision, there are downsides associated with the model too. For instance, SIB’s high transaction costs may prevent social innovation from being financed effectively, while questions remain about whether more beneficiaries could be assisted if the service interventions were instead directly commissioned through a public sector commissioner.

Social Cooperatives in Hungary were intended to address high levels of structural unemployment and social exclusion by creating opportunities for unemployed and disadvantaged people to  transition into paid jobs, thereby reducing over-reliance on public works schemes. These ‘new type’ social cooperatives were unique in that unlike normal social cooperatives, they allowed municipalities to become involved in their running. However, the initiative was found to be unsuccessful for a number of reasons.  For instance, the programme suffered from financial mismanagement, while the overfocus on business viability resulted in low levels of pay and tensions between management and cooperative employees. The involvement of local municipalities negatively impacted the cooperatives’ decisionmaking powers - which tended to follow governmental priorities rather than cooperative interests and principles.

Crowdsourcing policy priorities and insights

The afternoon opened with an interactive session led by Nesta, which invited event participants to share their views on how social innovation could support an inclusive economy, and what policymakers could do to make this happen.

The discussion suggested that:

  1. Social innovation is not inherently inclusive - In fact, active steps need to be taken to make social innovation inclusive by design, and efforts must be taken in the design and development of socially innovative services and policies to ensure that they are themselves participatory and inclusive.
  2. Social innovation can help make policymaking more open and participatory by opening up opportunities to incorporate end users in the policy process. For example, rather than adopting a top-down approach to developing its collaborative economy policies, the City Council of Barcelona used a more collaborative, participatory approach by crowdsourcing them from residents.
  3. Policymakers could go further in supporting this kind of innovation: There was broad agreement that policymakers could go further to support more socially innovative approaches to tackling marginalisation and inequality. Most agreed that doing so would mean reframing the role of policymakers from programme managers to becoming more of a curator, facilitator, and networker. This shift would also require a greater focus on building the capacity of different social innovation stakeholders, - such as communities, innovators or intermediaries - all the while working to embed user needs into the heart of policy programmes. 

During the event we asked participants to consider where social innovation can have the greatest impact in making the economy more inclusive. The results of the poll are displayed below. 

The discussion also helped surface a number of risks and challenges facing policymakers looking to use or support socially innovative approaches to build a more inclusive economy. Some of the key risks identified included:

  • Risk aversion and other cultural challenges in the public sector, such as an entrenched mindset of political short-termism and siloed working
  • A widespread failure to test policy ideas and learn from those that don’t work
  • A failure to consider the broader set of stakeholders who ought to be involved in policy design and development, including users, frontline staff and service providers
  • Whether unconscious bias might play an role in excluding certain groups of people when selecting social innovators to fund or support - and what actions could be taken to ensure that there is greater diversity in terms of the gender, ethnicity and socioeconomic backgrounds of those who access support or funding

Next steps

This event formed part of a wider programme of work to explore how social innovation policy can help tackle key challenges in Europe.

We’re interested in keeping the discussion going about the role public and social innovation could play in supporting a more inclusive economy. If you’d like to add your own contributions or vote on others’ policy ideas please do so using our online crowdsourcing platform here.

You can also get in touch with us on Twitter using the hashtag #socinnpolicy