Social outcomes contracts have saved millions in public funding, BSC report claims

21 Jun 2022 News

Payment-by-results contracts have generated £10 in social, economic and fiscal value for every £1 the government has spent on them since 2011, a report by Big Society Capital has claimed.

The Outcomes For All report found that in the past decade £139m invested in 72 social outcomes contracts (SOCs) has generated £1.4bn of fiscal, social or economic value, of which £397m are direct savings to or costs avoided by the public sector. 

Previously branded as social impact bonds, SOCs are a type of outcomes-based contract in which government investments are subsidised by social investors and delivered by charities or social organisations. Payments are only made once the specified social outcomes have been achieved by the delivering organisation.

These projects have focused on areas where public sector interventions have often been less effective, such as tackling homelessness, preventing former prisoners from reoffending and helping families stay together during a crisis. 

A global leader

The report said that the UK has established itself as a world leader in the SOCs market, with £71m invested into projects over the past ten years. 

To date, there have been 90 SOCs in the country which have supported more than 220 social enterprises and charities to deliver personalised care to over 55,000 people.

In comparison, the US, which was ranked second in the report, has delivered 27 SOCs. It is followed by Japan, with 17 contracts.

Potential for SOCs to grow further

Aman Johal, investment director at BSC, said: “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 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.”

She added: “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.”

Nigel Huddleston, the charities minister, 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.”

For more news, interviews, opinion and analysis about charities and the voluntary sector, sign up to receive the Civil Society News daily bulletin here.


More on