Inclusive Economy

On this page you can find out what the government is doing to help build an inclusive economy that works for everyone in society.

The government is committed to delivering an inclusive economy. Some of the ways it’s doing this include exploring innovative ways of commissioning and delivering public services, working with the finance sector to increase investment into tackling social problems, and growing the social enterprise and responsible business sectors.

Click the links below to find out more about how government is supporting these new ways of working to address society’s most challenging social issues, such as homelessness and youth unemployment.

Social Investment and the Social Sector

Social investment is the use of repayable finance invested into a social organisation to help it achieve its purpose and increase its impact on society. This type of finance can help provide working capital, enable organisations to buy new assets, and grow their business overall.

The government founded Big Society Capital in 2012, which has now become the world’s largest social investment wholesale institution. Big Society Capital, with co-investors, has invested more than £500 million into charities and social enterprises across the country. In 2015 government also worked with Big Lottery Fund and Big Society Capital to establish Access: the Foundation for Social Investment to address business capacity gaps that prevent social sector organisations from accessing the investment that they need to grow their impact.

Additional government initiatives which have helped social organisations to access affordable finance, such as loans and other investment products, are listed below:

DCMS is a partner to the Good Finance digital platform which enables social organisations to understand more about social investment.

The government has also established Social Investment Tax Relief, providing a regulatory and tax framework to incentivise private investors to invest in causes that they believe in. Please click the links below to find out more.

Mainstreaming Social Impact Investing

Social impact investing in the UK builds on the social investment market created through the initiatives listed above.

Social impact investing is defined as an investment in the shares or loan capital of companies and charities that not only measure and report their wider impact on society, but also hold themselves accountable for delivering and increasing positive impact.

Government is working closely with the finance industry to grow a culture of social impact investing in the UK, enabling individuals and institutional investors to invest in line with their social values.

Government also plays a key role in creating co-investment opportunities for a variety of private, public, philanthropic and social investors who want their investments to have a social impact. This means that public funds are complemented by additional repayable finance from private investors. This additional funding enables public sector funding to go further, and therefore increase its impact.

Click on the below links to learn more.

Social Impact Bonds (SIBs)

In addition to growing investment into social impact, the government is developing innovative ways to commission and deliver public services.

Social Impact Bonds (SIBs) are a commissioning tool with a focus on outcomes. Social Investors help finance projects upfront, while government only pays upon the delivery of results. SIBs enable the public, private and voluntary sectors to work together to solve difficult social issues, such as homelessness and youth unemployment.

The government is working to catalyse the development of SIBs at scale by providing expert guidance, sharing information on outcomes-based commissioning and building an evidence base.

Public Service Mutuals

Public Service Mutuals, which we refer to as mutuals, are another innovative way of delivering public services . Mutuals are organisations which have left the formal public sector and continue to deliver public services. They aim to have a positive social impact, and have a significant degree of employee ownership, influence or control in the way the organisation is run. The Mutuals Team supports both the creation of new mutuals, and the growth and development of existing ones.

Click on the links below for an introduction into the mutuals sector, or go to the Public Service Mutuals collection page for the latest information and support.

The Role of Business

Government recognises the importance that the public places on the social contribution of businesses. Therefore, it commissioned the Mission-Led Business Review looking at the way in which profit-driven businesses can make a powerful commitment to social impact.

Government also established the Inclusive Economy Partnership between business and civil society leaders to address some of the biggest challenges that face our society and encourage collaboration between the sectors. This partnership enhances the UK’s reputation as a global hub for a purpose-led business and finance sector. Click the links below to find out more.

Purposely is a free government-backed tool to embed a purpose beyond profit in a company’s governing articles. Purposely was designed and created by UnLtd, the Foundation for Social Entrepreneurs, in partnership with law firm Bates Wells Braithwaite (BWB), and with strategic support from the Department of Digital, Culture, Media & Sport (DCMS).

Dormant Assets

The government has looked at how dormant assets, such as bank and building society accounts that have been untouched for more than 15 years, can be used to fund good causes. In 2008, the government passed the Dormant Bank and Building Society Accounts Act. This established a scheme whereby banks and building societies can voluntarily transfer unclaimed dormant funds to an independent body called the Reclaim Fund. The money to help good causes is distributed UK-wide through the Big Lottery Fund.

In March 2017 an independent Dormant Assets Commission published recommendations for how to expand the scheme to include other types of assets, such as unclaimed insurance policies. The expansion of the dormant assets scheme will be led by the finance industry and supported by government. The intention is that any further funds can be used to support good causes, and to make it easier for customers to be reunited with their money that had previously been categorised as dormant funds.

Online Resources & Research

The government commissions, conducts and publishes high quality, open source research. We are always interested in partnering with organisations who can help build a robust evidence base for policy-making. Click below to see our latest research on topics relevant to building a more inclusive economy.

Published 30 July 2013
Last updated 26 July 2018 + show all updates
  1. We have added a link to the announcement of £3million to support creative projects in the Northern Powerhouse.

  2. Updated content on the government's inclusive economy work.

  3. Added social investment animation.

  4. Added new publication: 'Investment and Contract Readiness Fund: interim review report'.

  5. Added factsheet and section on social investment tax relief.

  6. Added new section including data visualisations, research and analysis

  7. Published 'Social Investment: introduction to government approach'.

  8. Added section and new guidance on co-mingling funds.

  9. First published.