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Five new regional projects using social investment to address and prevent issues affecting vulnerable people have been supported with more than £3.5 million from the Big Lottery Fund.

Services will be commissioned through social impact bonds (SIBs), a payment-by-results model using social investment. They will support children and young people at risk of going into care, people with mental health issues seeking employment and people with multiple and complex needs, such as learning difficulties and challenging behaviour.

The grants have been awarded under the Commissioning Better Outcomes (CBO) programme, which supports the development of more social impact bonds in England.

Details of the final full award announced today are:

Up to £336,111 has been offered as a final award to Mental Health and Employment Partnership (MHEP) for a five-year social impact bond (SIB) to support people with severe and enduring mental illness to get into work in Staffordshire and the London Borough of Tower Hamlets. Up to 2,800 people will take part in the programme voluntarily and move towards employment through a recognised approach called Individual Placement and Support, and payments will be made as they take up placements. Payments will fund service delivery and repay £400,000 start-up investment capital to Big Issue Invest, so social investment arm of The Big Issue.

Geeta Gopalan, Big Lottery Fund England Vice Chair said: “The Big Lottery Fund believes in supporting multiple ways of funding innovative schemes to tackle social problems. The social impact bonds we are supporting allow commissioners to test new ways of running costly services, while giving investors the opportunity to put money into the social sector in a meaningful manner. If these outcomes improve, the commissioner repays the investors for their investment plus the financial risks they took, achieving a social as well as financial return. This can lessen the burden of these problems on the voluntary and community sector, society and the public purse, freeing up more funding for people and communities in need of support.”

The four remaining awards are in-principle, with the lead organisation needing to secure investment from elsewhere in order to secure a final full offer. The details are:

Up to £880,000 has been offered in-principle to Evidence-Based Social Investments (EBSI) for an eight-year SIB with London Borough of Southwark Council to support around 65 young people aged 11 to 17 in care, subject to final elected member approval. This will deliver an intensive therapy-based intervention known as Treatment Foster Care Oregon to build young people’s social and life skills, within a caring family foster placement. Retrospective payments by the council and the Big Lottery Fund will be made against reductions in days spent in residential care, with £2 million investment capital to be secured to launch the proposal.

Up to £810,000 has been offered in principle to EBSI for an eight-year SIB to support up to 168 children, aged seven to 16 at risk of going into care in Medway, saving up to £6.24 million, subject to successful procurement. This will provide a therapy-based intervention known as Family Functional Therapy - Child Welfare to improve the lives of children and their families and reduce the need for care placements. The grant will top up outcomes payments against reduced care costs and £1.5 million investment is to be sought to fund start-up costs.

Up to £293,250 has been offered in-principle to North Somerset Council for a four-year SIB to support 240 local young people aged 10 to 17 who are at risk of going into care.Support will be provided to children and families, as well as to those already in care so they can return home safely and quickly. Outcomes payments will be made where a child is settled in, reunited with, or remains in the family home and where their well-being measurably improves. If successful the scheme could realise significant savings for the council. The therapeutic intervention to be used will be determined through the procurement process. Interested service providers will be seeking in the region of £350,000 investment to launch the project.

Up to £1,196,385 has been offered in-principle to London Borough of Newham Council for a four-year SIB to support 40 highly vulnerable adults with leaning difficulties. In contrast to existing arrangements, this will offer community-based housing through local voluntary and community sector providers with intensive, personalised support to significantly reduce challenging behaviour. The shift from an institutional to a community setting and evidence of improved life outcomes from personalised packages of support will generate outcomes payments and up to £3.25 million savings for the council. £1.61 million start-up investment is being sought.

A payment-by-results contract is one where a commissioner, which is normally a public sector organisation, agrees to make a payment to a service provider only if certain pre-specified and tangible outcomes are achieved and evidenced. This can mean that some service providers may need to secure money to run the service until outcomes payments are triggered. SIBs are one type of funding structure for these contracts to bridge this gap, with investors providing upfront finance to service providers who do not have the financial resources to wait until outcomes are achieved and payments are received. Therefore the risk is essentially transferred to the investor.

Also published today is a case study from North Somerset Council sharing experiences of setting up a SIB, the challenges and the lessons learned.

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Notes to Editors

• Commissioning Better Outcomes focuses on approaches that use payment by results mechanisms, particularly those which involve social investment such as social impact bonds (SIBs), to support people and communities most in need. Together with the Cabinet Office’s Social Outcomes Fund, up to £60 million has been made available to pay for a proportion of outcomes payments for these types of models in complex policy areas, as well as support to develop robust proposals.
• Today’s announcement takes the total amount awarded to £11,305,147 and 70 awards, with four final full awards, four in-principle full awards and 62 development grants. Details of all the grants to date
• CBO is now closed to new expressions of interest. Organisations that have received development funding or have put in a successful expression of interest are able to apply for full funding by 31 July 2016.
• The Big Lottery Fund supports the aspirations of people who want to make life better for their communities across the UK. We are responsible for giving out 40% of the money raised by the National Lottery for good causes and invest over £650 million a year in projects big and small in health, education, environment and charitable purposes.
• Since June 2004 we have awarded over £8 billion to projects that make a difference to people and communities in need, from early years intervention to commemorative travel funding for World War Two veterans.
• Since the National Lottery began in 1994, £33 billion has been raised and more than 450,000 grants awarded.