Social impact bonds will shortly be the most talked about method of public funding, Rob Wilson, the minister for civil society said yesterday.

Wilson gave a speech in London to the Social Investment Academy, an organisation which is designed to encourage investors to focus on social returns. He told delegates that social impact bonds were a “no-brainer” and that “the time for social investment has arrived”.

A social impact bond is a type of payment-by-results contract where a charity is backed by an investor to deliver a service to government, with agreed targets, such as decreasing obesity among a target population or reducing reoffending in particular area. The government only pays if the charity hits its targets, and the investor share the risk.

“Social impact bonds are barely mentioned in the media today,” Wilson said. “In a few years’ time they will be the most talked about funding mechanism for government social projects. I will be talking about them a lot.

“Social investment is growing. It will play an increasing role in how the sector will be funded and there is a role for all of us in achieving this. Social investment can accelerate the growth of new businesses, transform the impact of our public services and support stronger communities to tackle the social challenges that they face.”

Wilson also said he had embarked on a programme to reform the charity sector to make it work better.

“I’m pleased to inform you today that this government has embarked on a somewhat overdue and ambitious reform programme for charities and social enterprises,” Wilson said.

“It is my aim to deliver a sector that is more independent, more resilient and more sustainable. Better able to meet the many challenges that it faces.”

In an interview with Civil Society News earlier this year he said he wants to create a market for social impact bonds worth “at least £1bn” by the end of the Parliament.