Andy Haldane: Social capital is the glue that binds communities together

Times of national crisis tend to bring out the best in people. The Covid-19 crisis has been no exception. In streets, villages and towns across the country, people have reacted to the unfolding crisis by helping their neighbours and communities. Over 4000 mutual aid groups spontaneously emerged to fill holes in the social fabric.

This is a familiar pattern. Past pandemics have tended to collapse the capital on which capitalism is built: physical capital, like machines and factories; human capital, like jobs and skills; and financial capital, like debt and equity. Yet there is one capital that, historically and currently, has bucked these trends: social capital.

Social capital is the glue that binds together communities otherwise at risk of coming unstuck. The Covid-19 crisis has reinforced the values of community purpose and social solidarity on which social capital thrives, allowing it to grow as other capitals have crumbled.

The evidence in this report from The National Lottery Community Fund demonstrates clearly this mass flourishing in social capital. It sets out what communities have been able to achieve with the support of £650 million in funding this year to every Local Authority in the UK. This funding is the seed-corn of future growth - personal, social and economic.

Take volunteering. It has been estimated that there are around 20 million volunteers in the UK. Their contribution to growth – personal, social and economic – is chronically under-estimated. I estimate that the social sector contributes over £200 billion in social value each year in the UK – around 10% of GDP - only one tenth of which currently finds its way into GDP.

The three spotlights in this report illustrate the many ways in which community capital, supported by The National Lottery Community Fund, can have a wider social and charitable benefit. For example, the £100 million Climate Action Fund has acted as a catalyst for community organisations addressing environmental issues, helping support the UK’s net zero target by 2050.

The National Lottery Community Fund support has been provided to organisations rolling out digital technologies, helping close digital divides at a time of greater-than-ever need due to physical distancing measures. And with the Covid-19 crisis having hit hardest young people, the £170 million of support for youth activities from The National Lottery Community Fund has never been more important.

At a time when the importance of social capital has never been greater, this report begins to offer answers to two key societal questions. First, how best do we recognise and measure the contribution of civil society?

This forms part of a broader effort I am helping develop through Pro Bono Economics and the Law Family Commission on Civil Society, which aims to put measurement of the social sector and social capital at the centre of how we measure societal success. With its role so crucial, it is hard to think of a better time to do so than now.

Second, how do we best invest that endowment of social capital? While Covid-19 has had a terrible impact on people across the country, it has also underlined the strength and solidarity of our communities. This provides strong foundations on which to build back not just better, but kinder. This report shows how The National Lottery Community Fund is doing just that.