The government has introduced social impact bonds to help turn around troubled families.
Ministers hope a trial of the scheme in Westminster and Hammersmith and Fulham in London, as well as Birmingham and Leicestershire, could raise up to £40m to pay for intensive intervention in deprived families.
The backers of successful projects will receive a premium from the savings incurred from improved family behaviour but, if the project fails, they could lose their investment.
The move is a triumph for the MP Graham Allen, who recommended the use of social impact bonds in his report on early intervention, published earlier this year. Allen said the scheme was welcome in light of the recent riots in England.
“In terms of early intervention, I hope that, as well as thinking about what we do with the people who rioted, we think about what we do with their children and we think about a long-term, preventive policy as well as the short-term stuff,” he told Community Care.
Children’s charities have also welcomed the move.
“The government’s clear backing shows its huge confidence in the scheme, and we now need the financial sector to get behind the approach,” said Anne Longfield, chief executive of the national charity 4Children. “The economic and social gains for those involved will be enormous.”
She warned, however, that social impact bonds were not a magic wand to financing vital work in the present difficult economic circumstances and there remained a strong role for government investment.
She said the bonds had an important part to play in financing such work but were only ever likely to account for a relatively small proportion of the investment needed to enable the most vulnerable families to flourish.
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