'Social Impact Bonds' to fund Government schemes to help troubled families

Published by Jon Land for 24dash.com in Housing and also in Central Government, Communities

Private investors will be asked to fund intensive help programmes for troubled families under a trial launched by the Government.

Ministers want philanthropists, charities and other organisations to plough cash into projects tackling anti-social behaviour, crime, addiction and poor education.

In return for putting cash into a Social Impact Bond, investors will be paid a dividend for any successful project.

The Government expects to raise up to £40 million across pilot schemes in Hammersmith & Fulham, Westminster, Birmingham and Leicestershire, which are expected to be up and running early next year.

Civil society minister Nick Hurd said: "We must not be afraid to do things differently to end the pointless cycle of crime and deprivation which wrecks communities and drains state services.

"Social Impact Bonds could open serious resources to tackle social problems in new and innovative ways.

"We want to restore a stronger sense of responsibility across our society and to give people working on the frontline the power and resources they need to do their jobs properly.

"Social Impact Bonds could be one of many Big Society innovations that will build the new partnerships between the state, communities, businesses and charities and focus resources where they are needed.

"The four local authorities that will pioneer this work are taking a bold and exciting step."

Projects will be judged successful if families are taken out of deprivation and long-term dependence on the state, according to the Government.

Percentage returns on investments are likely to be in the single digits and will be paid for by local authorities and other organisations like health trusts.

It will be up to them to work out how the intervention projects work and what they deem to be successful.

Official estimates put the public service bill for the 46,000 most deprived families at more than £4 billion a year, around £100,000 per family. That covers the bill for a wide range of services including police, courts, drug rehabilitation and foster care.

Research carried out by the Local Strategic Partnership Be Birmingham found that two families in the city cost the taxpayer £37 million over four decades.

Children's minister Sarah Teather said: "We want the most vulnerable children and young people to get a better start in life and have more opportunities to do well at school and beyond.

"Targeting families with many complex problems has been a success in some areas. Family intervention demonstrates that the lives of children and young people can be turned around.

"At the same time, this is a more efficient way for local authorities to work, as fewer children are excluded from school or taken into care, and this means money can be reinvested in helping more families."

The new trial is the first to tackle "multiple problems" within families and follows on from earlier Social Impact Bond project launches to tackle reoffending and support to prevent children being put into care.

Shadow Cabinet Office minister Tessa Jowell said: "The Government cannot on the one hand cut funding for charities and voluntary sector organisations, forcing them to slash services and reduce staff, and on the other expect them to step up to the mark and deliver these outcomes.

"Nick Hurd cannot seriously say he wants to give the front line power and resources when charities up and down the country cannot pay the bills because of cuts coming too far and too fast.

"Tackling difficult problems like anti-social behaviour and addiction needs a more coherent approach from Government.

"The devil is in the detail - what criteria will be applied to financial backers? How will the Government ensure they are serious about tackling these problems long term?

"What indicators will be used to judge the success of these projects and how will Government ensure the payment by results model doesn't just allow providers to cherry-pick members of the target group who are the easiest to help?

"We have seen too much hot air about the 'big society' to take such initiatives purely at face value."