Social outcomes contracts have saved government almost £400 million, study shows

Melanie May | 21 June 2022 | News

Money

Social Outcomes Contracts have generated £10 in social, economic and fiscal value for every £1 spent by government and saved it £397 million since first launching ten years ago, research has shown.

The first published study of the public value generated by these contracts to date, it found that this approach to public service delivery saves almost £3 for every £1 spent by government, reducing the cost of tackling complex social issues like homelessness and unemployment.

Aman Johal, Investment Director at Big Society Capital commented:

Advertisement

“With public budgets tightening, it will be critical for the Government to consider alternative funding solutions to challenges such as the cost-of-living crisis and levelling up.

 

“We are thrilled to have new data which for the first time demonstrates how Social Outcomes Contracts (SOCs) can empower local authorities and communities to implement local solutions, bringing together genuine collaboration across stakeholders and much stronger accountability for results compared to traditional contracting mechanisms.

 

“While the approach is not without challenges, the evidence shows that there is potential for social outcomes contracting to grow and continue to add value to improving public service delivery in the UK. We hope this report will open up meaningful discussions amongst policymakers around the potential and future of SOCs as an approach to enable effective delivery of public services for people.”

Previously known as Social Impact Bonds, the contracts are a form of public service commissioning where local social sector delivery organisations are provided with working capital to give them flexibility and support to innovate and improve services to meet individuals’ needs. Upfront socially motivated investor capital is used to pay local delivery organisations to tackle complex social issues, with Government funding only released when successful outcomes are achieved.

Big Society Capital’s Outcomes For All report draws on independent analysis conducted by ATQ Consultants, and reveals that, to date, the UK has conducted 90 such projects to support more than 220 social enterprises and charities in delivering personalised care to over 55,000 people.

Examples include SOCs launched to tackle rough sleeping in 2018 by the then UK Ministry of Housing Communities and Local Government (now the Department for Levelling Up, Housing and Communities). The largest programme was in Greater Manchester (GM): the GM Homes Partnership and has housed over 90% more people than originally targeted at half the cost of similar interventions funded in other ways.

Another SOC, the West London Zone, is a mentoring scheme currently working with 732 children in schools to help them achieve their potential, while the Skill Mill: a social enterprise focused on rehabilitating young ex-offenders reports seeing a re-offending rate of 9% compared to 72% nationally.

Minister for Civil Society and Youth, Nigel Huddleston, said:

“The Government is proud to have played a key role in this journey by championing innovative outcomes funds, such as the Life Chances Fund, which move the emphasis away from delivering activities and outputs towards delivering the real-world impact we want to achieve.”