The launch of the Office for the Impact Economy last November was a significant moment, even if it has not yet received the attention it deserves.
Previous governments have created civil society infrastructure before, most notably the Office for Civil Society, but the OIE represents something conceptually distinct: a deliberate attempt to treat the impact economy as a strategic economic asset rather than a charitable afterthought. The impact economy encompasses businesses, social investors and philanthropists that deploy their resources explicitly to generate social and environmental benefit alongside financial return, and it is already estimated to be worth £106bn to the UK. The question is whether the wider system is now organised to make the most of it.
In this series, we have argued that Britain’s central problem is not a shortage of ideas or civic energy. It is a shortage of strategic capacity: the institutional ability to translate ambition into sustained action across electoral cycles, departmental boundaries, and competing priorities. The Fifth Industrial Revolution makes that deficit more consequential with every passing week. AI, demographic ageing, climate adaptation and geopolitical instability are not challenges that any single sector can manage alone. They require a model of collective leadership that this country does not yet have.
Civil society sits at the heart of that model. Not as a residual provider, not as a contractor to be managed at arm’s length, but as an essential co-producer of public value. The evidence for this is not rhetorical.
During the pandemic, 12.4 million volunteers mobilised in the first ten months of the first lockdown, reaching communities and filling gaps that no commissioning process could have anticipated. And at Anthropy 2026, where over two thousand leaders from across sectors gathered at the Eden Project last week, the same pattern was visible: community energy projects in Bristol, housing co-operatives in Grimsby, neighbourhood hubs across the country, all demonstrating that the answers to our hardest challenges are already being addressed at a local level. The relational infrastructure that makes such mobilisation feasible was built over years by local organisations that are typically underfunded, often under-recognised, and structurally marginalised from the decisions that most affect the people they serve.
The Big Society, launched in 2010 with genuine rhetorical ambition about the power of community action and voluntary effort, was rapidly and fatally undermined by the austerity programme that accompanied it. Asking civil society to do more while simultaneously cutting the local authority funding, grants and statutory services on which it depended was not a partnership model. It was a transfer of responsibility without resources, and the sector is still recovering from it. Any serious attempt to rebuild trust between government and civil society must reckon honestly with that legacy. Co-production cannot be a cover for withdrawal.
The Office for the Impact Economy is a genuine attempt to chart a different course. Its hub-and-spoke model, acting as a coordinating front door across government departments, reflects a deeper understanding of the problem. So does the new Civil Society Council meeting in Downing Street, and the commitment to a dedicated civil society team at the centre. These are not trivial gestures. They represent a coherent, if early, architecture for the kind of collective leadership that the strategic state requires. But they will only mean something if they are accompanied by the funding, the commissioning reform, and the honest acknowledgement of past failure that genuine partnership entails.
The structural barriers to co-production run deeper than any single institutional reform can reach. Short-term commissioning cycles reward outputs over relationships. Appraisal frameworks do not yet reward civil servants for the quality of their cross-sector partnerships. And the procurement reflex, the tendency to convert every relationship with an external organisation into a compliance-heavy contract, remains a powerful disincentive to the trust-based working that effective co-production actually requires.
A strategic state capable of navigating the Fifth Industrial Revolution will need to address all three. That means longer-term and more flexible funding models for civil society organisations, so that they can invest in their people and take measured risks. It means embedding social value genuinely rather than performatively in spending decisions, with real consequences for how those decisions are made and evaluated. And it means reforming the incentive structures that govern public sector careers so that partnership is rewarded, not treated as an optional extra.
None of this is technically complicated. The knowledge exists, the models exist, and the civic energy most certainly exists. What the Office for the Impact Economy can now provide, if it is given the mandate and the resources to do so, is the connective tissue: the shared intelligence, the trusted relationships, and the strategic coordination that turns dispersed goodwill into systemic change.
The question for senior leaders across central and local government is whether they are prepared to use the space that this new architecture affords. Ultimately, co-production works best when it is anchored in a shared sense of national direction: what we are trying to achieve together, and what we are each prepared to contribute. That is precisely the question the National Strategy Project, itself a civil society initiative, is now putting to the country through a deliberative national dialogue, and it is the right question to ask.
The Fifth Industrial Revolution does not wait for institutional arrangements to catch up. The organisations and communities that already have some of the answers to our most difficult challenges are out there. The strategic state’s job is to help to meet them.
Patrick Diamond is professor of public policy at Queen Mary University of London and a former head of policy planning in No.10. Vijay K. Luthra is a public service transformation specialist and former civil servant, local government councillor, school governor and NHS NED