Expert Insight: How the UK's Better Futures Fund could create system-level impact

On 14 July 2025, the UK government announced a £500m fund intended to break down barriers to opportunities for vulnerable children and young people. The Better Futures Fund is an outcomes fund: a multi-year pot of money that pools dedicated resources from government and partners such as local authorities, to pay for outcomes.

• Read more: UK government announces £500m social outcomes fund to support vulnerable children

In common with other outcomes funds, the Better Futures Fund will support multiple social outcomes partnerships (also known as social impact bonds, or SIBs). These are contracting mechanisms that pay on the basis of desired outcomes being achieved. Social outcomes partnerships often leverage social investment to cover the upfront capital required for a service provider to set up and deliver an intervention. This capital is repaid with interest when the desired outcomes have been achieved, with verifiable evidence.

A significant commitment from the UK government

This announcement is significant on several fronts, overturning the weariness and wariness towards such instruments within the UK in recent years, which I wrote about in Pioneers Post a little while ago. 

With the Treasury leading the announcement of the Better Futures Fund, this sends a clear signal that social outcomes partnerships and outcomes funds are not a peripheral concern

First, with the Treasury leading the announcement of the Better Futures Fund, alongside the Department for Culture, Media and Sport, this sends a clear signal that social outcomes partnerships and outcomes funds are not a peripheral concern. The Treasury is also uniquely placed to overcome some of the known barriers confronting such approaches: in particular the rigid annualised budgeting confronting spending departments (which is not normally aligned with the timescales of outcome achievements), and the well-documented ‘wrong pockets’ problem where siloed public bureaucracy leads to ‘who pays’ and ‘who saves’ debates across departments when trying to tackle cross-cutting social problems.

Second, the Better Futures Fund will run for ten years, far exceeding the three- to four-year durations of most outcomes funds. This is notable, considering that governments often work within short political cycles. This is likely to generate positive impact, as services will have time to set up, develop and establish themselves, while having the ability to test and embed iterative improvements. It also allows us to have greater confidence that outcomes secured are sustained.

Third, the Better Futures Fund is noteworthy for its size. According to the Outcomes Fund Directory maintained by the Government Outcomes Lab at the Blavatnik School of Government, University of Oxford, there have been 10 previous funds in the UK, and 11 others internationally in a diverse range of countries including France, Colombia and Sierra Leone. The Better Futures Fund is easily the biggest outcomes fund. Within the UK, it far outstrips the current largest – the Life Chances Fund – by about 4.5 times when adjusting for inflation.

• Read more about the launch of the Life Chances Fund: 10 SIBs launched to support children in care and tackle drug dependency

Like the Life Chances Fund, the Better Futures Fund is intended to use central government funding as outcomes payments to catalyse local funding and partnerships. The £70m Life Chances Fund catalysed more than £100m in co-payment of outcomes from local partners such as local authorities, NHS organisations and even philanthropic foundations. In other words, every £1 from central government leveraged more than £1.43 in additional outcome payments from partners. Assuming a one-for-one ratio, the Better Futures Fund could catalyse at least another £500m from partners, generating around £1bn in total for outcomes payments.

Optimising the impact of the Better Futures Fund

While much of the attention since the announcement of the Better Futures Fund has been on the impressive scale of funding, the logic of outcomes-based approaches should behove us to focus instead on how we can best optimise impact. After all, the size of funding or project is not a straightforward indicator of the resultant impact.

One of the smallest social outcomes partnerships in the world, Abu Dhabi’s Atmah project, achieved impact far exceeding what we might have expected from its size due to the deliberate design and execution of the project as a ‘policy accelerator’ to flush out systemic barriers that subsequently enabled the national disability inclusion policy to be implemented effectively.

This article offers a number of insights, drawing on my experience of supporting the design and implementation of social outcomes partnerships and outcomes funds in the UK and internationally.

1. Activate the key change mechanisms

Since the introduction of the world’s first social outcomes partnership, The One Service project in Peterborough, in 2010, there has been cumulative learning, alongside a growing body of evidence, toolkits, guidance and other resources that have helped reduce some of the time and costs associated with designing and implementing such approaches.

• Watch our video from 2013 about why the Peterborough prison social impact bond is working for ex-offenders

More importantly, we are now much clearer about the mechanisms that trigger change beyond effective service delivery. It is these change mechanisms that we should seek to replicate. There are three specific characteristics underpinning the resilience and impact of such approaches. These are: cross-sector alignment and shared purpose, outcomes focused and evidence-responsive delivery, and engaged governance that reinforces collaboration and collective problem-solving.

While highlighting the importance of partnership and collaboration, it is important to recognise that success is not determined by the specific partnership model or social outcomes partnership structure, but is instead rooted in open discussions and negotiations around relative strengths, motivations and risk appetites of the various partners. Questions such as “what is the best social outcomes partnership model?” or “who is the best social investor?” are therefore misplaced.

The Better Futures Fund should pay specific attention to how shared vision, trust, collective problem solving, and continuous learning are the specific objectives to be achieved through intentional design and implementation of every project supported by the fund. Uncritical replication of existing social outcomes partnership models without careful consideration of how these may support the ‘change mechanisms’ in each specific instance will not achieve the desired relational qualities.

2. Think ‘system’

There has been a growing realisation that outcomes-based projects can improve public services more generally beyond the specific outcomes achieved for service beneficiaries. Wider system-level impact can be achieved through policy and service design strengthening. Within the UK, some localities have improved wider commissioning practice beyond the service areas in which their projects have been operating. For example, Norfolk County Council used the lessons learned through its social outcomes partnership for carers to strengthen commissioning practice in domestic violence support services.

In other areas, social outcomes partnerships have contributed to the reconfiguration of local ecosystems to better sustain an outcomes focus beyond the duration of projects. For example, the Single Homelessness Prevention Service operating across six London councils successfully tackled the ‘revolving door’ challenge by demonstrating that reducing homelessness requires seamless integration of housing, health and social care, probation and other services. Stakeholders are sustaining cross-team and cross-sectoral partnerships in order to grow seamless wrap-around services more widely.

The effectiveness of outcomes funds does not simply rest on their scale and duration, but is influenced by clear design thinking

Unfortunately, the use of outcomes funds and social outcomes partnerships as explicit mechanisms for system transformation has been largely incidental to date, with no real effort at evidencing beyond anecdotes.

Internationally, lessons from ‘high constraint-low capacity’ contexts have been illuminating. It is precisely these characteristics that have led to a ‘system impact by design’ approach in many lower- and middle-income countries. For example, the Cameroon Kangaroo Mother Care (KMC) project adopted a train-the-trainer model to embed KMC expertise within the Cameroonian health system to sustain improvements made in reducing neonatal morbidity and mortality.

The Better Futures Fund should build on such lessons and recognise that outcomes are more than those triggering payment. System change beyond successful project delivery can add real value by sustaining and potentially upscaling impact over the longer term.

The importance of design thinking for the Better Futures Fund

The effectiveness of outcomes funds does not simply rest on their scale and duration, but is influenced by clear design thinking. The design choices we make can bring about additional benefits for public services and for localities.

In the UK, despite the cutbacks in public services since 2010, we still see the government as ‘problem-solver in chief’. It may be more fruitful to look at how we may tackle social challenges through unleashing public innovation capacity, rather than public sector innovation capacity. The former locates the solutions in a collective ecosystem approach.

With careful design, the Better Futures Fund can model an approach through which government leverages a collective effort towards societal good. By balancing central accountability with local flexibility, it can help find locally-led, place-based solutions that work simultaneously as mechanisms for system strengthening that contribute towards ‘bigger picture’ strategic priorities.

Dr Chih Hoong Sin is an independent expert in social outcomes partnerships, outcomes funds, and impact investment.

Header photo by Vanessa Loring on Pexels, published under a Creative Commons licence.