Government announces Social Outcomes Fund to help charities win payment-by-results contracts

Francis Maude, minister for the Cabinet Office, says the £20m fund is 'an opportunity for social organisations to approach commissioners with new ideas for bonds'

Francis Maude
Francis Maude

The government has announced a £20m Social Outcomes Fund to back social impact bonds and other payment-by-results contracts.

The outcomes fund, which Nick Hurd, the Minister for Civil Society, told Third Sector about earlier this year, is intended to be used in situations where solving a social problem would create savings for several different public sector bodies, but where the costs would outweigh the benefits for each of those bodies by themselves.

The fund will offer a matching element to allow bodies such as local authorities and health trusts to commission a payment-by-results contract in partnership with government. The element the public body must pay will be small enough for them to make savings if the contract succeeds.

It expects to back between 10 and 20 ventures and to make investments of about 20 per cent of the total value of a PBR contract. It hopes to attract £60m of investment from other public bodies.

Francis Maude, minister for the Cabinet Office, said at the launch this morning that government had been proved not to be good at solving problems such as "homelessness, worklessness and community breakdown" and that the government needed to find ways to find social enterprise and charity to do so instead.

He said that charities often didn’t have the resources to fund a payment-by-results contract, and that the outcomes fund was intended to help solve this problem by setting up social impact bonds, which transfer the risk to social investors.

He said the fund was a "big opportunity" for social organisations to approach commissioners with new ideas for bonds.

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