Achieving the potential of the Chancellor’s social impact investment
Jess Reedy, Senior Policy Engagement Officer at the Government Outcomes Lab, argues that the government's new social impact investment vehicle, if well designed, is an opportunity to improve services to help the most vulnerable across the UK.
In amongst the fiscal measures set out in yesterday’s Autumn Budget, the Chancellor announced a significant step forward in social policy: the development of a new social impact investment vehicle.
This initiative, led by the Chief Secretary to the Treasury in partnership with the Department for Culture, Media, and Sport (DCMS), is set to bring together socially motivated investors, the voluntary sector, and government agencies to collaboratively address some of society’s most complex challenges. This marks a key milestone in the journey towards more sustainable, results-driven public service delivery. But if the approach is not executed properly, the desired social and economic returns will not be delivered. How can we ensure that this social impact investment vehicle delivers genuine, measurable benefits for society?
Having worked closely with DCMS, and previously the Cabinet Office, for nearly a decade as a knowledge partner in the field of social impact and outcomes-based partnerships, this is a vital opportunity to learn from the lessons of the past. Our latest report from the Government Outcomes Lab (GO Lab) reflects on the last 15 years of social outcomes partnerships, also known as impact bonds, in the UK. Our analysis reveals three key principles for successful cross-sector partnerships that capitalise on impact investing.
Effective partnerships
The introduction of a social impact investment vehicle signals a transformative shift in how government collaborates and co-creates with investors, the voluntary sector, and local authorities. It requires partnerships that put people and meaningful outcomes at their core and move with intentionality towards improving these outcomes. However, leveraging this model requires candid recognition of longstanding challenges, including the weakened capacity of local government and inconsistent partnership management practices.
To achieve meaningful impact, public services need improved, real-time metrics on costs, outcomes, and operational performance, as was done with the Life Chances Fund. Social outcomes partnerships have shown that they can legitimise multi-functional teams and empower data-driven decision-making. Yet scaling this approach requires sustained investment in the skills, infrastructure, and long-term partnership agreements that support effective collaboration–such as formal-relational contracting–needed to tackle complex social issues.
A broader understanding of public value
In developing these new social impact partnerships, it’s essential that Government broadens their understanding of public value to include what genuinely benefits communities. Public value encompasses multiple dimensions, such as effectiveness, transparency, efficiency, and social impact, all of which we hope to see championed by the new Office for Value for Money.
Too often, public sector ‘value’ is reduced to cost-efficiency alone, with a focus on awarding contracts rather than achieving meaningful outcomes. Through this new social investment model, government can play a pivotal role as a co-creator of public value, fostering a collaborative approach across departments, local public sector bodies, and private and voluntary partners to deliver outcomes that truly serve the public.
Radical transparency
Achieving the potential of this new investment vehicle will depend on a robust, continuous commitment to generating and sharing high-quality evidence across all partners. The Life Chances Fund has regularly shared information on outcomes achievements and payment levels in the public domain, project by project. This experience was groundbreaking yet possible. Over the past decade, we have worked with government to build a community of practice, allowing practitioners and policymakers to move beyond isolated project evaluations towards a holistic knowledge-sharing approach.
This collaborative learning, spanning central and local government, delivery organisations, socially motivated investors, and researchers, has been critical in translating data into actionable insights. At GO Lab, we’re eager to contribute further to this knowledge through our ongoing work with government, including insights from our evaluation of the Life Chances Fund. We invite partners to join us in deepening our understanding of how innovative social investment and commissioning approaches can most effectively improve lives and address society’s toughest challenges.
A new social impact investment vehicle, on its own, will not achieve systemic reform and public sector transformation. Yet the experience of social outcomes partnerships over the past 15 years shows us that it can play a significant role to support more impactful collaborations across the public, private and voluntary sector. With sustained commitment, courageous leadership and appropriate resourcing the announced new vehicle could contribute to institutionalising these vital practices.