UK Government commits to ‘deepen collaboration with the impact economy’ in new industrial strategy

The UK Government has committed to “deepen collaboration with the impact economy, and with businesses which have a social purpose” in its new industrial strategy published this week.

The strategy will “unlock innovation, boost inclusive growth, and strengthen community resilience,” the document says, aiming to “align economic value with social outcomes”.

The government also pledges to build more “strategic partnerships with mission-driven capital, like impact investment and philanthropy, to combine public, private, and philanthropic resources to generate positive social and environmental impacts in communities.” 

The government does not give any detail about what these strategic partnerships would look like, but the Treasury and the Department for Culture, Media and Sport are currently developing a “social impact investing vehicle” with impact investing professionals, the details of which are expected to be revealed in the coming weeks.

• Read more: UK Government will create social impact investment vehicle to deliver its missions

Stephen Muers, CEO of the UK’s social investment wholesaler Better Society Capital, said: “We were excited to see the emphasis on aligning economic value with social outcomes, an approach central to the social impact investment market in the industrial strategy.

“It was encouraging to see the government’s intent to deepen collaboration with the ‘impact economy’ to boost inclusive growth, and the recognition of impact investment as a vital part of delivering their mission.”

A ‘meaningful moment’

In a foreword to the document, prime minister Keir Starmer, chancellor Rachel Reeves and secretary of state for business and trade Jonathan Reynolds describe the so-called “modern industrial strategy” as a “new approach for a new era… a 10-year plan to make the UK the best country to invest in anywhere in the world.” 

The strategy focuses primarily on boosting business growth and investment in key “high-growth” sectors such as the financial industry, professional and business services and life sciences. 

The impact economy focus is part of the plan’s intention to to create “an enduring partnership with business”, in which it pledges to “work closely with trade unions and organisations representing the unique perspectives of civil society”.

It’s early days – and as always, the test will be delivery

Dominic Llewellyn, founder of impact consultancy Achieve Good and an advisor on the government’s new social impact investing vehicle, said it was the first time an industrial strategy “formally recognised impact investors, philanthropists, social investors and purpose-driven businesses as essential partners in driving inclusive and resilient economic growth”.

Writing on Linkedin, he added: “It’s early days – and as always, the test will be delivery. But for those of us working to help grow the UK’s impact economy, this is a meaningful moment.”

• Read more: UK government’s Social Impact Investment Advisory Group members revealed

Procurement: a boon for social enterprises?

The strategy also pledges to use social procurement to create social value. It will require public authorities to set three-year targets for procurement spend with SMEs and social enterprises, and to report on progress annually. 

Public bodies will also be required to set at least one social value key performance indicator in major contracts, specifically relating to jobs, opportunities or skills, and report “regularly” on progress.

Membership body Social Enterprise UK welcomed the commitments to social procurement and purpose-led business, but was disappointed the strategy did not suggest any plans to develop “diverse business models” – a manifesto pledge of the government that mentioned cooperatives and mutuals as a way to drive inclusive economic growth. 

In a statement on Linkedin, Social Enterprise UK said it hoped the issue would be addressed in the autumn. “When it comes to support for social enterprises, together with our members, we’ll continue to work to ensure the ambitions of the government are realised.”

Top image: secretary of state for business and trade Jonathan Reynolds. Credit: David Woolfall / UK Parliament.