Prime minister Theresa May has commissioned a review of the effectiveness of social impact investment as part of an effort to expand the use of the financing method to tackle more policy problems.
A taskforce has been asked to review progress in opening up more social investment opportunities and will consider how financial services firms could provide products that give savers and investors the opportunity to make a social impact.
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Separately, it was announced that Sajid Javid, the secretary of state for housing, communities and local government, has been asked to consider what measures government could take to unlock and boost social impact investment, particularly in relation to issues such as homelessness and housing for vulnerable people.
Social impact bonds are a form of investment where the money is used to address social problems including tackling reoffending or homelessness, and providing funds for intervention support to stop children going into care. The money saved as a result of the reduced demand for expensive public services is then used to repay investors.
“Our financial institutions have long-recognised the importance of using their investments to generate a positive social impact as well as a financial return,” May said.
“The challenge now is for industry to unlock the capital to boost impact investment even further, finding solutions to some of the burning injustices we face as a society, and helping make sure the country works for everyone.”
The taskforce will be led by Elizabeth Corley, the vice chair of Allianz Global Investors, and will make recommendations in the summer.
Corley said that “government has a vital role to play in accelerating the development of UK social impact investing”.
She added: “With research showing that more than half of people in the UK are interested in purchasing social impact investment products, but that only 9% have done so, this is a market with enormous potential, waiting to be unlocked by the type of focus and commitment announced today.”