UK’s new Office for the Impact Economy will ‘unlock billions’, promises government
Government says new ‘central point of contact’ for impact economy recognises the ‘untapped potential’ of the country’s social impact sector, while the movement welcomes ‘joined up’ support.
The UK government this week launched a new office tasked with growing the impact made by social investors, purpose-driven business and philanthropists.
The new Office for the Impact Economy will be based in the Cabinet Office, with chief secretary to the prime minister Darren Jones (pictured top, with prime minister Keir Starmer) as ministerial lead.
In a statement the government said the new office will provide a “central point of contact” for social investors, purpose-driven business and philanthropists to engage with government on the impact economy.
The remit of the Office for the Impact Economy includes coordinating the government’s engagement with the impact economy and driving cross-government strategy on the sector.
I look forward to working with colleagues across government to unlock billions of pounds-worth of investment
The impact economy policy agenda has most recently been housed in the Department for Culture, Media and Sport, which has led on impact investing, social investing, dormant assets and social outcomes partnerships. Being based in the Cabinet Office positions the new office more centrally within government.
This central, 'cross cutting' positioning for impact policy is not new to the UK government, however. Ministerial responsibility for 'civil society' had previously been located in the Cabinet Office between 2006 and 2016. Before that, from 2001 to 2006, there had been a Social Enterprise Unit located in the Department of Trade and Industry, with a specific focus on social enterprise and its own social enterprise minister.
Countries to position responsibility for the impact economy so centrally in government previously include the Barack Obama administration’s Office of Social Innovation and Civic Participation in the US, the State Secretariat for Social and Solidarity Economy in France and the Malaysian Global Innovation and Creativity Centre (MaGIC).
In a statement this week, chief secretary to the Treasury James Murray said: “This Office will drive growth and support national renewal. I know the potential of the social impact sector has long been untapped, and I welcome the commitment and willingness to work in partnership with businesses, impact investors and philanthropists who have been involved so far. I look forward to working with colleagues across government to unlock billions of pounds-worth of investment to better support communities.”
Reaction from the impact economy
Jovan Owusu-Nepaul (pictured), head of public affairs at Social Enterprise UK, told Pioneers Post the establishment of an Office for the Impact Economy is welcome recognition of the contribution social enterprises make to UK communities.
He said: “Social Enterprise UK has long called for joined-up government support, so it’s encouraging that the office has been launched by the prime minister at the heart of government in the Cabinet Office, and will work across all departments.
“The Office has an opportunity to build more supportive policy across many of the crucial areas that social enterprises work in – everything from health and social care to housing and energy – and a way for Labour to fulfil their manifesto commitment to grow diverse business models, such as social enterprises and co-ops.”
Holger Westphely (pictured), managing director of social investor Big Issue Invest, told Pioneers Post the announcement was an “exciting moment” for the UK social investment community. He said: “The sector is already delivering real impact but with further coordination and backing from the government, it can achieve much more. A central office that aligns government investment with private capital has real potential to scale our model of change even further.
“We look forward to engaging with the new Office, and our partners across the impact economy, to get greater capital flowing and unlock business solutions that drive down the shameful levels of poverty experienced by millions in our country right now.”
From ‘ad-hoc’ successes to strategic partnership
The launch of the Office for the Impact Economy put into action one recommendation made by the government’s Social Impact Investment Advisory Group (SIIAG), delivered in a report published at the start of this month.
The SIIAG was established in February 2025 by Darren Jones, when he was chief secretary to the Treasury and the secretary of state for culture, media and sport, to support the government on the development of a new social impact investment vehicle and to provide “recommendations on ways to effectively mobilise social impact capital”.
Chaired by Schroders chair Dame Elizabeth Corley, and including the CEOs and representatives of a mix of impact investors, local government, asset managers, institutional investors, a large UK bank and sector advisory bodies, the SIIAG published a report on 3 November.
The report identified a lack of coherent policy on impact across government and an “ad hoc” approach where successful partnerships with the impact economy remain in isolation, failing to unlock the sector’s full potential. Recommendations in the report to address this included the creation of an Office for the Impact Economy.
- Read more: Independent advisory group urges UK government to create an ‘Office for the Impact Economy’
In a statement, Darren Jones said: “Change comes as much from the ground up as from the top down. Truly meaningful and long lasting impact is created not from focussing on internal processes in Whitehall, but when government empowers communities – specifically those who know their local area, the people, the problems and the opportunities inside and out.
“That’s why I set up the SIIAG last year, to advise us on how better to work with people who want to direct their finance towards social good, to drive the change that government cannot deliver alone, and to ensure government investment was being properly co-ordinated with philanthropic and community-led social investment. So I’m delighted that the prime minister has announced we will be acting on SIIAG’s advice to establish this new Office.”
The SIIAG report said the new office should be led by a dedicated director, staffed with a permanent team, including secondees from the impact economy sector, and provided with a ring-fenced budget to crowd in private and philanthropic investment.
When asked by Pioneers Post about the leadership, staffing, budget and action plan for the Office for the Impact Economy, the Cabinet Office said that there were no further details yet available.
Co-designing the offer to the impact economy
Dominic Llewellyn (pictured) is head of cross-sector partnership the Impact Economy Collective and was a member of the SIIAG. He welcomed the announcement of the new office as a step to help government departments join up policy, capital and delivery for the impact economy.
Llewellyn said: “It’s about moving from isolated initiatives to a system that can scale what works — from blended finance and outcomes partnerships to social enterprise collaboration and place-based philanthropy and business partnerships.”
But, Llewellyn added, the office will only be successful if the impact economy embraces it as an opportunity to be practical, collaborative and ambitious in the way it works with government, while the government must now focus on delivery.
The key will be ensuring it works with the impact economy, not just on it
“Success will require sustained commitment — from ministers, officials and the impact economy alike — to make sure this Office realises its full potential rather than becoming another short-lived initiative. The key will be ensuring it works with the impact economy, not just on it — creating genuine two-way partnerships where both government and the sector bring ideas, evidence and investment to the table” he said.
In its statement announcing the new office, the government said a “co-design process” will take place with external stakeholders over the coming months to shape what the office will offer to the impact economy, central and local governments and communities.
The Office for the Impact Economy will also support and champion co-investment opportunities such as the £500m Better Futures Fund, said the statement. The Better Futures Fund is an outcomes fund designed to support disadvantaged children and young people, launched by the government in July and informed by the work of the SIIAG.
In addition, the government statement said the new office will work closely with the Office for Investment’s dedicated impact capital function, which works with large pools of impact‑aligned investment.
What’s next for the UK’s impact economy?
The SIIAG’s November report was created in collaboration with 57 organisations from across the social impact investment and business sectors, including Social Enterprise UK, Access, the Foundation for Social Investment, Pathway Fund and Power to Change.
Alongside its recommendation to create the Office for the Impact Economy, the report’s recommendations included: the creation of an independent Impact Economy Advisory Group as a successor to the SIIAG; the creation of an annual Civil Society and Impact Economy Summit; targeted reforms to pension fiduciary duty, gift aid and wealth advice that would unlock more capital for impact; and the creation of an ‘Impact Partnerships Academy’ to equip government officials with the skills needed to work effectively with impact economy organisations.
The SIIAG report further identified five impact economy partnership opportunities where government could move quickly to improve outcomes in communities across the UK, build further precedent and expertise across government, and grow the impact economy.
The opportunities included a Children’s Residential Care Impact Investment Facility, through which Department for Education grant funding would be blended with impact capital to enable mission-led care providers to acquire properties and staff high quality homes in areas of demand and a Temporary Accommodation Impact Investment Facility, a public-private scheme to support people experiencing homelessness.
Helping the impact economy support and enable local ambition is essential to achieving real, lasting impact
Dominic Llewellyn said: “Looking ahead, the Office [for the Impact Economy] could use the next Spending Review to co-design and announce these kinds of initiatives with the impact economy — embedding the ‘match-first, leverage-first’ approach we recommended, where every pound of public money attracts additional capital, insight and delivery capability.”
Llewelyn believes connecting the new office with location-specific decision makers, for example mayors, combined authorities and local leaders, is a crucial next step in turning the office into an “engine for delivery”.
He said: “Many of the most effective examples of the impact economy are place-based, and helping the impact economy support and enable local ambition is essential to achieving real, lasting impact.”
Top image: Darren Jones, chief secretary to the prime minister, and Keir Starmer, UK prime minister (credit: Number 10, Flickr)
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