A former senior Treasury minister has called for a potential Labour government to set up a dedicated department to harness philanthropy and social investors to deliver its policy objectives.
Writing in City A.M. newspaper, Stephen Timms, the Labour candidate for East Ham who was chief secretary to the Treasury from 2006 to 2007, said if his party wins the election, the “impact economy” would be “essential to mobilising the resources, expertise and innovation to drive transformative progress”.
He wrote: “A Labour government should set up something like an Office for the Impact Economy – a joint Treasury-business and trade unit to partner with key stakeholders, working to align socially motivated capital and business with our missions.”
He said philanthropy “holds immense potential to drive transformative change” but said unlocking its full impact required strategic government collaboration.
“We could significantly amplify the resources to tackle our most pressing challenges through innovative use of public funding to crowd in philanthropic giving,” he wrote.
He said resources to tackle the UK’s most pressing challenges could be increased through the use of public funding to attract philanthropic giving.
“For example, the £85m Community Match Challenge, launched during the Covid-19 pandemic, successfully matched government grants with funds from philanthropists, charitable funders and foundations,” he said.
“This collaborative approach supported charities and community organisations tackling food poverty, mental health and unemployment.
“By expanding this approach, a Labour government could harness philanthropic capital to accelerate progress on our missions.
“If we could grow philanthropy to just 2 per cent of GDP, nearly £50bn per year could be unleashed for public good.”
Timms, who has been a Labour MP for 30 years, said: “An incoming Labour government has the opportunity to mobilise unprecedented financial resources, talent and innovation to accelerate progress across our five missions, from kickstarting economic growth to saving our NHS to making Britain a clean energy superpower.
“We need a new partnership between government and the impact economy, putting shared values into practice to build a more prosperous, equitable and sustainable future for all.”
Nicole Sykes, director of policy and communications at the think tank Pro Bono Economics, said: “This is a concrete and potentially powerful proposal from a serious politician.
“Bringing philanthropy and foundations into the heart of financial decision-making in government would be a major step forward.
“And, given the importance of a thriving civil society to the wellbeing of the country, it’s an idea that should transcend the politics of the election.
“Irrespective of who forms the next government, bringing civil society into the heart of national policymaking is an approach worth pursuing.”
Seb Elsworth, chief executive of Access – the Foundation for Social Investment, said: “This important intervention goes to the heart of a persistent public policy issue – how will we find the money to tackle our biggest social problems, especially with limited financial resources?
“The proposals to create a new unit at the heart of government recognise the huge opportunity that exists to channel more private, philanthropic and public money into investments which improve people’s lives across the UK – driving sustainable and inclusive growth, as well as delivering a financial return.
“Blended finance is central to this and we look forward to more detail emerging.”
Tess Godley, policy and advocacy director at Better Society Capital, said the social investment wholesaler was “thrilled” to see Timms’ suggestion.
“As he states, a Labour government would not go far in achieving their five missions without the support of social and impact investors, philanthropists and purpose-driven business,” said Godley.
“We invite decision-makers to join his call in collaborating with us to take on Britain’s knottiest social challenges together, with expert partners who are well versed in providing support to communities who need it.”