Private money to fund family scheme
Published 26/08/2011 | 00:12
Private investors will fund intensive help programmes for troubled families under a trial launched by the Government.
Ministers want philanthropists, charities and other organisations to plough cash into projects tackling anti-social behaviour, crime, addiction and poor education.
In return for putting cash into a Social Impact Bond, investors will be paid a dividend for any successful project.
The Government expects to raise up to £40 million across pilot schemes in Hammersmith & Fulham, Westminster, Birmingham and Leicestershire, which are expected to be up and running early next year.
Civil society minister Nick Hurd 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. We want to restore a stronger sense of responsibility across our society and to give people working on the frontline the power and resources they need to do their jobs properly."
Projects will be judged successful if families are taken out of deprivation and long-term dependence on the state, according to the Government. Percentage returns on investments are likely to be in the single digits and will be paid for by local authorities and other organisations such as health trusts.
Official estimates put the public service bill for the 46,000 most deprived families at more than £4 billion a year, around £100,000 per family. That covers the bill for a wide range of services including police, courts, drug rehabilitation and foster care.
Shadow Cabinet Office minister Tessa Jowell said: "The Government cannot on the one hand cut funding for charities and voluntary sector organisations, forcing them to slash services and reduce staff, and on the other expect them to step up to the mark and deliver these outcomes.
"Nick Hurd cannot seriously say he wants to give the front line power and resources when charities up and down the country cannot pay the bills because of cuts coming too far and too fast."