Life Chances Fund


The Life Chances Fund (LCF) is an £80m fund, which aims to help those people in society who face the most significant barriers to leading happy and productive lives. This forms part of the Prime Minister’s Life Chances Strategy. The £80m has been committed by central government to contribute to outcome payments for payments by results (PbR) contracts which involve socially minded investors – i.e. towards Social Impact Bonds (SIBs). These contracts must be locally commissioned and aim to tackle complex social problems.

The fund will aim for contributions of c. 20% of total outcomes payments, with local commissioners paying for the majority of the outcomes payments. However the level of contribution from the LCF will be refined to reflect the balance in savings that are generated for the wider public sector. Where the rate of savings to central government are relatively low and/or the immediate savings to the local commissioner are very high, levels of contribution will be refined to reflect this.

The overall objective of the £80m Life Chances Fund is to help those people in society who face the most significant barriers to leading happy and productive lives. It will do this by:

• Increasing the number and scale of SIBs in England;

• Making it easier and quicker to set up a SIB;

• Generating public sector efficiencies by delivering better outcomes and using this to understand how cashable savings are;

• Increasing social innovation and building a clear evidence base of what works;

• Increasing the amount of capital available to a wider range of voluntary, community and social enterprise (VCSE) sector providers to enable them to compete for public sector contracts;

• Providing better evidence of the effectiveness of the SIB mechanism and the savings that are being accrued; and

• Growing the scale of the social investment market.

Life Chances Fund Principles

• The LCF will enable VCSE providers to take a lead role in transforming public services to deliver better outcomes for people and communities.

• The LCF will have a 9 year life, inviting applications for 12 months after each of a number of thematic call outs, with final funding decisions taking place by July 2018.

• The LCF will contribute towards payment for outcome contracts focused upon tackling complex social problems. The fund will not contribute towards non-outcome based payment models, because the LCF’s aim is to promote greater use of outcome based commissioning models on the basis that they can generate greater value for money than non-outcome based models.

• The LCF will only top up locally commissioned SIBs, and will not subsidise other central government outcomes funds (e.g. mental health and employment, homelessness).

• The LCF will provide a minority contribution to outcome payments for SIBs where the majority of outcome payments are made by local commissioners. The LCF will aim for contributions of c. 20% to outcome payments, although this may vary across policy areas as some may have higher benefits and savings for central government than others.

• The LCF will focus on targeted thematic call outs. Thematic call outs and hard deadlines will drive SIB development in specific social policy areas.

• The LCF aims to scale both the size and the number of SIBs currently in existence, focusing on larger SIBs aimed at working in real depth on a specific issue/participant group. Application scoring will be weighted for proposals that (i) achieve scale and/or are (ii) innovative.

• The LCF will help to build the evidence base for SIBs on both the costs and effectiveness of interventions.

• The LCF will encourage SIBs that support early action to improve people’s quality of life and reduce the burden upon public services.

• The LCF will ensure value for public funds based on appropriate and proportionate risk and return levels.

• The LCF will ensure high levels of local VCSE and service user engagement and involvement. • The LCF will also aim to increase transparency in the SIB market which will help reduce transaction costs and support more commissioners to develop SIBs.

Fund themes The LCF will issue themed call outs, or invitations for bids from applicants for SIBs across six themes. The first two themes will be as follows:

• Drug and alcohol dependency – e.g. early diagnosis and treatment1

• Children’s services – e.g. reducing time spent in residential care, preventing entry into care

For more information check the website 


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