The Better Futures Fund will work with impact investors to finance projects that improve children’s lives and opportunities across the country.
The UK government has launched a ten-year £500m (€576m) fund to pay for social outcomes that improve conditions and create opportunities for vulnerable children and young people, with matching upfront funding sought from social investors and other organisations.
The Better Futures Fund is thought to be the largest of its kind in the world, aiming to support up to 200,000 children and their families over the next decade through the collective efforts of national and local government, local communities, charities, social enterprises, investors and philanthropists.
It is expected to be deployed in areas such as improving school attendance and behaviour, helping children to avoid a life of crime, boosting mental health care for young people and offering youth employment.
Among groups backing the fund’s launch were Save the Children UK, The King’s Trust and Oxford University’s Blavatnik School of Government.
Targets
Under the social outcomes structure, the government pays for successful accomplishment of set social targets by charities or other organisations implementing the projects. The upfront and operational costs of the projects are paid for by impact investors, the charities carrying out the work and other organisations, in return for a small profit if those targets are attained.
The government said social outcomes partnerships had already been used successfully across the UK, with over 180 commissioners using the model across the country.
The government hopes to build on the work of existing results-driven charities such as AllChild, which supports communities in underserved neighbourhoods in the UK to help children and young people build social, emotional, and academic skills. AllChild said its projects had already halved persistent school absences, and that 80% of children it had been involved with had improved emotional wellbeing.
The Better Futures Fund is part of a wider government slate of measures known as Plan for Change, one element of the which is improving opportunities for children.
UK chancellor Rachel Reeves launched the fund at an event hosted by AllChild in a school in Wigan, north-west England.
“This fund will give hundreds of thousands of children, young people and their families a better chance. For too long, these children have been overlooked. Our Plan for Change will break down barriers to opportunity and give them the best start in life,” she said.
Louisa Mitchell, CEO of AllChild said it was vital that children engage with the right support and opportunities through holistic support rooted in local communities.
“I hope this fund will be a catalyst for a new way of working – one which prioritises prevention, shared accountability for locally identified outcomes, and genuine cross-sector partnerships. This is how we can ensure every child no matter where they live has the support and opportunities they need to flourish,” she said
The fund has been shaped by a Social Impact Advisory Group, established in early 2025. This brings together government, socially-motivated investors, banks, civil society and social investment experts to discuss how social outcomes funds other types of impact vehicles could boost social funding at a time when government spending capacity is becoming increasingly constrained.
The government is currently under pressure from its own members of parliament to abolish restrictions on welfare payments to people with more than two children – a move that would reduce child poverty, but which could require an increase in government spending of over £3bn a year.
Wide reach
UK social investor Better Society Capital (BSC) is a member of the Social Impact Advisory Group. Stephen Muers, BSC’s CEO, told Impact Investor the Better Futures Fund was a “great outcome” of the talks between the government and social investors.
“We’re really pleased with this. We think this is a real signal of the government’s commitment to working with impact investors. More importantly, we think projects funded by this can probably reach over 200,000 people, based on what previous projects have delivered, so there’s going to be some really positive impact that the government can really build on,” he said.
The fund’s success will take time to gauge. It is unclear when the first outcomes contracts supported by the fund will be signed – further details of the fund will be revealed “in due course”, according to the government. Also, it will take time for outcomes to be assessed, given the long-term timeframe of many of the projects involved.
However, Muers said he expected the fund to provide a spur for further similar initiatives.
“The reason we’ve got this announcement is because we’ve done smaller funds in the past and then built the next stage. There will be more local authorities getting used to this method, central government will be keen, there will be more delivery partners who have done it, so there is a lot of potential to scale up in the future,” he said.
Muers said the announcement showed the UK government was serious about seeking innovative ways of increasing social investment.
“The government has been talking a lot about public sector reform, making the state work differently. This is an example of that, which really makes it concrete for people,” he said.
Research commissioned by BSC, published in mid-2024, estimated that the use of social outcomes contracts to deliver public services in the UK had created nine times more in public value than they cost to provide.
