• Home
  • About
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Essex adopts payment-by-results funding

0
  • by Jo Tura
  • in Funding · LGPSi
  • — 13 Dec, 2012

Essex County Council has raised £3.1m for the initial stage of its Social Impact Bond and is now looking at five other areas to be funded in the same way.

The council commissioned Social Finance to find social investors to put money into the bond and has raised the initial amount from nine investors in the last four weeks.

Investors will see an 8.3% return from the payment-by-results scheme if the outcome objectives of the bond are achieved. The objectives are to keep a total of 110 children aged 11-16 out of care for a set period. The initial amount raised sees teams set up to use Multi Systemic Therapy, working with those on the edge of care and their families to avoid adolescents actually being taken into care. Once the first cohort of children has been through the therapy, payment will come through Essex County Council, and the Departments of Health, Education and Work and Pensions and new investment will be sought for the next round.

Margaret Lee, executive director for finance at Essex told Room 151: “As a result of keeping those children out of care we anticipate that we will avoid £17.3m worth of cost. We would have £10.5m of that figure. Investors are putting in money, paying for the project, and they will get their money back which is about £6.7m and they will also get a return on their investment which is about 8.3% in a medium case scenario.”

Lee said that the council has been so encouraged by this bond that it is considering a pipeline of other opportunities for social investment including drug recovery services, social isolation and alcohol counseling in custody suites.

Brian Bailey is an ex-local authority finance chief who now sits on the board of Social Finance. He thinks that the market should expand, given the new willingness of local authorities to try different ways of financing.

“Local authorities tend to be cautious by nature to new ways of working,” he said “but the pressures are so great on them now that they have got to look at everything that comes along. I think that once there are one or two trailblazers who prove the concept then the idea will get around. The good thing about the public sector is that success does get shared round. They’re not commercially sensitive in the same way as you would get in the private sector so I think that when people see the results of this Essex bond interest will climb.”

“There has to be a willingness to adapt to this performance led approach,” he added. “And that fits in the economic environment we are in now with a shortage of funds.

The Greater London Authority has also just awarded Social Impact Bond contracts to two providers who will work to get rough sleepers off the streets. The bond will target a group to include 831 individuals who have been recorded rough sleeping or stayed at a London rough sleeping hostel in the last six months and who have been recorded rough sleeping at least six times over the last two years. The upfront costs of the programme have been raised and DCLG will transfer funding to the GLA for outcomes payments worth up to £5m.

The UK’s first social impact bond was launched in Peterborough two years ago to reduce re-offending rates among ex-prisoners.

Share

You may also like...

  • Q&A: Mike Weston on the Pensions Infrastructure Platform and LGPS Q&A: Mike Weston on the Pensions Infrastructure Platform and LGPS 24 Jun, 2015
  • Councils seek assurance from new government on local authority funding Councils seek assurance from new government on local authority funding 25 Jul, 2019
  • LGA calls for greater devolution to councils LGA calls for greater devolution to councils 8 Jan, 2013
  • Westminster called on to consider widespread tax reform for local government Westminster called on to consider widespread tax reform for local government 16 Dec, 2015

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 1 day ago

    How can local government ‘build back better’?: Beverley Gower-Jones looks at the options for driving small business entrepreneurship in clean technologies. Innovation is essential for local authorities to save money and reduce emissions, it is the… dlvr.it/RtT3nS pic.twitter.com/bSMB6OG70t

    Room151 1 day ago

    Helen Randall: Spelthorne report places spotlight on ‘controls’: Fresh criticism of Spelthorne Council raises the question of what “good” controls look like when negotiating a property deal. Spelthorne Council’s continuing debacle over property… dlvr.it/RtSPhy pic.twitter.com/9uCOJgBcH6

    Room151 1 day ago

    Step-out strategies: Hitting the sweet spot between liquidity and ultra-short duration: Sponsored article: Jemma Clee describes how an ultra-short duration strategy can help local authorities enhance returns. Despite the expectation of a low, and… dlvr.it/RtSPZb pic.twitter.com/pdXPpv5lcN

    Room151 2 days ago

    What role will climate change have on the pricing of government bonds?: Sponsored article: Kerry Duffain finds that “vulnerability and resilience to climate change” have a significant impact on the cost of government borrowing. Ardea Investment… dlvr.it/RtNKv7 pic.twitter.com/wDjT31x4Yt

    Room151 3 days ago

    ESGenius: Slashing emissions will fuel green growth for decades: Sponsored article: Velislava Dimitrova argues that a big enough investment could mean transition to a low, or no, carbon economy can become a reality. The world needs to slash carbon[...] dlvr.it/RtKZJp pic.twitter.com/cd8S3ijERl

    Room151 3 days ago

    Prudential code: “Not perfect, but its heart is in the right place”: The new Prudential Code offers revised rules for borrowing. Nikki Bishop is sceptical it will work while Gary Fielding offers his support. Nikki Bishop I have been asked to give[...] dlvr.it/RtKZFh pic.twitter.com/OriN28lXcb

    Room151 4 days ago

    Tremendous report from @MarkSandford3 citing @room_151 no fewer than six times (despite what the @lgcplus fact checking/counting dept might tell you) #localgov commonslibrary.parliament.uk/research-brief… 1/5

    Room151 2 weeks ago

    Dan Bates: Capitalisation directions are not the only tool for rebuilding finances: Dan Bates argues deep seated problems are contributing to a rush for capitalisation directions. For some time now we have been reading that a number of councils are in… dlvr.it/RspKff pic.twitter.com/xRRsgVim9u

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Thinking about the Fed
  • Next story Treasurer’s reflections – Q4: Revenue strikes again!

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.