Essex to become first local authority to use social impact bonds

Essex County Council is set to become the first local authority in the country to use social impact bonds, as part of its financing arrangements for support for vulnerable young people.

After completing a feasibility study, the council has decided to use such bonds to commission a number of Multi-Systemic Therapy (MST) teams. MST is described as “an intensive treatment programme that focuses on families with complex needs”.

In its first year, Essex’s MST programme is expected to work with 170 children in the county. The aim is to reduce the number of children in care by 90.

Investors in the bonds only receive payment if the programme hits its target.

“The cost of investing in MST compared with the cost of a care placement is 4:1, so for every £1 spent on MST, Essex County Council saves £4,” the authority claimed.

Essex said it hoped such bonds would help continue a downward trend in the number of children in care in the county. The council currently has 1,535 children in care, down from 1,630 in November 2010.

Peter Martin, Essex’s leader, said: “Social Impact Bonds will strengthen families’ capacity to cope and help young people avoid having to enter care or custody in the first place.

“We want young people in Essex to have the best start in life. Intervention with families before they reach breaking point can help ensure more children in Essex get the chance to live their life with the same hopes, fears and opportunities we want for our own children. Family intervention demonstrates that, with support, lives can be turned around. We want to be able to provide that support and commitment for our most vulnerable families.”

Nick Hurd, Minister for Civil Society, backed Essex’s move.

“This is a great example of how county councils can do things differently to improve people’s lives,” he said. “Besides helping some of the most vulnerable young people in Essex to get a better start in life and have more opportunities to do well at school, it will also raise additional money to be directed at helping more families.”

The minister added that the Cabinet Office would continue to work with other councils which have begun work on social impact bonds. “We hope this will act as a model for even more authorities to consider social impact bonds as a way of raising finance to unlock better service delivery for their residents,” he said.