New boost to help Britain's most vulnerable young adults and the homeless
- Published on Friday, 23 November 2012 12:11
- Posted by Vicki Mitchem
A radical approach to solving complex and costly social problems, which will also save the taxpayer millions, has been given a cash injection by the Cabinet Office today.
Two new Social Impact Bonds, which will support teenagers at risk of going into care and help rough sleepers, are being introduced alongside the Social Outcomes Fund. This new £20 million fund will facilitate even more Social Impact Bonds, as part of the latest stage in the Government's drive to tackle social problems through payment by results.
Social Impact Bonds, the first of which was developed by Social Finance, allow private investors and philanthropists to invest in a project to address a specific social problem; they are then only paid a financial return if the project is successful. This is a way of blending financial return with a social impact and an approach that is good for the Government because the financial risk is taken by the investor and not the taxpayer, as payments are only made for success. It's also good for the voluntary sector, as it opens up many more opportunities for Social Enterprises and charities to deliver public services.
If not tackled early, complex and deep-rooted social problems, such as homelessness and youth unemployment, can lead to long-term dependency on the state and cost the taxpayer millions. For example, Government data collected in October and November 2011 estimated that £9 billion is spent annually on troubled families – an average of £75,000 per family each year. By intervening early to tackle the problems before they spiral out of control, the existing and recently announced Social Impact Bonds will improve over 10,000 people's lives as well as save taxpayers' money.
Britain is already leading the world in the development of Social Impact Bonds. But the Government is determined to accelerate the market even further, which is why it is setting up the Social Outcomes Fund and a Centre for Social Impact Bonds based in the Cabinet Office. The Fund helps tackle the problem of costs for an intervention falling in one place, but the benefits land elsewhere, acting as a brake on the use of Social Impact Bonds.
The Prime Minister said:
Britain is a world leader in using finance to help grow a bigger, stronger society. We launched the world's first social investment Bank - Big Society Capital - and we invented the world's first Social Impact Bond in Peterborough to tackle reoffending.
"I'm delighted that we're taking another lead today in launching the Social Outcomes Fund, which will enable more innovative Social Impact Bonds like the two announced today. By providing new forms of finance to invest in more early intervention programmes we can help the most vulnerable and reduce demands on the state."
Launching the fund today, Francis Maude, Minister for the Cabinet Office, said:
We are committed to developing innovative new ways to transform people's lives and tackle social problems. That's why we have introduced the Social Outcomes Finance Fund so that more Social Impact Bonds can be set up to improve the lives of the vulnerable.
"Initiatives such as Big Society Capital and Social Impact Bonds mean that we are ahead of the rest of the world in the development of our social investment market. It is a major source of growth and support for the important work of charities, volunteers and social enterprises."
Nick Hurd, Minister for Civil Society, said:
Social Impact Bonds are opening up serious resources to tackle social problems in new and innovative ways. This is about communities, businesses and charities all working together to change people's lives, whilst at the same time making savings for the taxpayer.
"While ten Social Impact Bonds have been rolled out to date, in some cases organisations have had a shortfall of money, which has prevented them from setting up a social impact bond. In order to push forward this radical agenda the Government is announcing a £20 million top-up fund so that many more Social Impact Bonds can be set up."
Leader of Essex County Council, Peter Martin, said:
I am proud that Essex has had the vision to progress with a new social care model to deliver improved services and support for our most vulnerable young people. Essex has always strived to be innovative and forward thinking, and it is this attitude that has allowed us to explore social investment. I welcome the launch of the Social Outcome Fund and encourage others to explore the opportunities it could bring."
The Mayor of London, Boris Johnson, said:
I am determined to halt the persistent problem of rough sleeping in London, and while we have made great strides in cutting the number of entrenched rough sleepers there is still much more to do. This complex issue requires innovative solutions, and our social impact bond is a good opportunity to encourage philanthropists and the private sector to help deliver a vital public service."
Care and Support Minister, Norman Lamb, said:
We know that more needs to be done to invest in preventative care. The current system too often only reacts to crises such as a fall; we want to prevent care needs from worsening or even happening in the first place.
"Social Impact Bonds could be a great way of funding new schemes which prevent or delay a health or social care need, or the loss of independence. This is why we will be asking local areas who are doing innovative work on social investment to come forward and tell us how they can do this locally."
Housing Minister Mark Prisk said:
The new Outcomes Fund gives local authorities the chance to find innovative solutions to problems in their area that really deliver, while generating savings across government. The Mayor's pioneering social impact bond for London's rough sleepers, backed by Government funding, is already leading the way, giving the Capital's homelessness charities the freedom to try new ideas to help the city's most frequent rough sleepers - who account for nearly half of all rough sleeping in London. By paying them by results the Government can ensure the best value for money, and we can help find the services that really do transform lives for the better."
The Essex Social Impact Bond is a five-year programme which will provide intensive support to approximately 380 adolescents and their families. The target is to divert around 100 adolescents from entering care. Essex County Council is the first local authority to commission a Social Impact Bond in Children's Services. The success of the Social Impact Bond will be measured by the reduction in the number of days the adolescents spend in care, as well as by improved school outcomes, wellbeing and reduced reoffending. Social Finance raised £3.1 million from social investors, including Big Society Capital and Bridges Ventures, to fund the Social Impact Bond. If the interventions deliver successful outcomes, the investors might expect returns in the range of 8-12% pa. The investment is entirely at the investors risk; should the intervention not deliver outcomes, the local authority does not pay.
Adolescents are the single largest age group among looked-after children in the UK. They often enter care because of multiple and complex behaviour problems, triggered at adolescence, which lead to aggression, antisocial behaviour, parental loss of control, family breakdown and ultimately an inability or lack of desire to continue living with the birth family.
The Mayor of London Social Impact Bond, developed in partnership with the Mayor of London and leading charities St Mungo's and Thames Reach will provide support for around 800 rough sleepers who are neither long-term rough sleepers nor new to the streets. The aim is to reduce rough sleeping, help people get into stable accommodation, get them jobs and manage their health better.
In parallel, the Department of Health will be asking people in local areas who are doing work to develop Social Impact Bonds in social care prevention, to register an interest in becoming one of a small number of trailblazer sites.
Source: ©Cabinet Office