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Office for Civil Society to design £40m social impact bonds to help 'problem' families

Finance | Vibeka Mair | 26 Aug 2011

The Office for Civil Society will work with four local authorities to design tailored social impact bonds to fund help for ‘problem’ families, with each council deciding in December whether to go ahead with the bonds.

Nick Hurd, minister for civil society, says if launched, the four bonds could raise up to £40m from investors.

The bonds will be the first local government social impact bond (SIB) trials in the country. Currently, there is one central government SIB within the Ministry of Justice which is aiming to reducing re-offending in Peterborough.

Broadly, an SIB is a mechanism to encourage an investor to fund new initiatives to reduce social problems, so reducing future public expenditure, and freeing up resources to pay back the original investor.

Hammersmith & Fulham, Westminster, Birmingham and Leicestershire councils will share up to £300,000 in funding from the Office for Civil Society to design an SIB to help families blighted by anti-social behaviour, crime, addiction and poor education. If they are happy with the design, the local authorities will procure providers to deliver services within the SIB next Spring.

An Office for Civil Society spokeswoman said any provider could bid to run services within SIBs, “it would be up to the council,” she said.

She added that the  four local authorities were chosen to provide a mix of the urban and rural, and to deliver a range of different outcomes. “Westminister does have a lot of wealthy families,” she said. “But there is also pockets of deprivation.”

Nick Hurd, minister for civil society, 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."

The new trial will build on a social impact bond pilot to tackle reoffending in Peterborough Prison launched by the Ministry of Justice last September. Liverpool and Essex are also looking to trial a related social impact bond initiative to support vulnerable adolescents and their families with the objective of preventing care entry.

The social impact bond model was advocated by Graham Allen MP in a report commissioned by the Prime Minister to look into early years intervention. It found that investing in early intervention can generate massive savings to reduce crime, underachievement, teenage pregnancy and alcohol and drug misuse, he recommended the use of social impact bonds to finance and deliver interventions, alongside other solutions.

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Who's Who: Nick Hurd