A project launched last month in Essex aims to transform the lives of 380 troubled adolescents and their families by keeping them out of trouble, in school and out of care. In the process, Essex County Council hopes that, in the first five years, it will save more than £10 million in spending on these at-risk youths by keeping many of them out of the costly care system.
A new programme targets adolescents aged 11 to 16 who are ‘on the “doorstep of care” because of their challenging anti-social behaviour, early offending, or serious problems at home or school’, said Roger Bullen, head of partnership for the Essex Schools, Children and Families Directorate.
Unusually, the costs of establishing the programme are being paid by outside investors through a social impact bond, rather than by Essex County Council itself. Eight investors have provided £3.1 million to fund a five-year programme of intensive support for high-risk adolescents and their families.
At New Philanthropy Capital (NPC), we see social impact bonds as one tool to increase investment in expensive but potentially effective interventions and are watching their development closely.
If the project succeeds—by keeping 100 vulnerable youths out of care—investors will be repaid by Essex with interest of as much as eight to 12 per cent per year. If it fails, the investors’ funds are entirely at risk and the local authority does not pay, according to Social Finance, a non-profit organisation aimed at developing the social investment market, which developed the bond for the Essex programme.
This structure means that, if successful, Essex will be able to pay the costs of intensive family-based therapies with what it eventually saves by keeping young people out of care. ‘The funds come from the area where you are saving money. Very quickly, you can see the impact on the budget’, Bullen said.
‘There is a high degree of excitement in the council in this approach and how we can use it in the future,’ he said, adding that Essex is the first local government body to launch a social investment bond. ‘I know people are watching it nationally’ he said.
Bullen now spends one day a week in the Cabinet Office, supporting a team in government that is analysing whether social impact bonds could help fund programmes to solve other social problems. The government’s enthusiasm for social impact bonds is not shared by everyone, however, and there are concerns that they should not be rolled out until the model is proved. At NPC we’ve cautioned against some of the hype that surrounds social impact bonds and impact investment, and we’re keen to see what the evidence says in due course.
The most established programme in the UK—to reduce reoffending among prisoners released from Peterborough Prison—is in its third year of operation. According to Lisa Barclay, a director at Social Finance, data on its effectiveness won’t be available until next year, ‘but anecdotal evidence suggests it’s having a positive impact,’ she said.
The Essex programme is being watched nationally because of its funding structure but also because it holds the potential to reduce the use of expensive state care. The costs of keeping one child in care can range from £20,000 per year for a foster placement to £180,000 per year for a residential care placement, Barclay said.
There is the potential for wider cost savings as well. Many young people at risk of going into care may also have a conduct disorder, an expensive national problem which our research suggests costs the UK an estimated £52,000 per young person through costs to the criminal justice system, education system, social services, health services and through loss of earnings. In total, this could amount to £1.5bn per year. The bond will also track hoped-for improved school outcomes, improved well-being, and reduced reoffending, Barclay said,
Late in March, the National Institute for Health and Care Excellence (NICE) issued its first clinical guidelines on conduct disorder in an attempt to flag the problem among medical personnel, and so steer affected youngsters to the proper, early help. Conduct disorder is a serious but frequently unrecognised mental health condition characterised by repeated and persistent misbehaviour that may include stealing, fighting, vandalism and hurting people or animals, according to the NICE guidelines.
Conduct disorders provide the most common reason for children to be referred to mental health services in the UK, it said, and affects an estimated six percent of all children aged five to 16 years, according to a study by the Office of National Statistics. If conduct disorder is left untreated in childhood, ‘many children will go on to have serious mental health problems as adults,’ NICE noted.
As in many parts of the UK, Essex local authorities realized a few years ago that their social services were struggling to deal with a small, but costly, population of adolescents.
‘We had lots of funding for services that was tied up in the acute end—in taking youths into care,’ Bullen said. ‘We knew, really, that had we had the right services in place, they would have been able to stay at home with their families. If we had worked with them earlier, they wouldn’t have become troubled adolescents. There was a vicious cycle,’ he said. ‘We didn’t have the right services in place. We didn’t have the money to invest in early intervention. We needed something to break that cycle.’
Action for Children, a children’s charity hired to deliver the service in Essex, is in the process of hiring and training two small teams of four therapists and a supervisor each in Basildon and Colchester, said Deanna Neilson, operations director for Action for Children. Therapists in Colchester were expecting to be working with their first few clients this month, she said.
Using a program called Multi-Systemic Therapy, each therapist will work intensively with an adolescent, and their families, who have been referred to the programme by Essex over a period most likely to last three to five months. In that time, the therapist will set pragmatic, short-term goals aimed at curbing the problems that have brought the youngster to the attention of social services, Neilson said. The secret to MST is that one therapist works closely with an adolescent and his or her family, making three to four visits a week over a few months. They work actively to solve problems within the family, outside the family, and break negative cycles of behaviour which can cause family breakdown.
‘They go to the family home in the evenings, on the weekends. They are there with the family,’ Neilson said. Typically, goals start small: ‘A goal might be for the parents to understand where the young person is all the time. Or that the young person have three evening meals out of seven with the family,’ Neilson said. ‘We try to set practical, pragmatic, smart goals.’
A lot of therapists help parents with their own skills. ‘We might make sure the mum is out of bed in the morning to get the kids breakfast and to school on time,’ she said. Many parents, who may have had their own brushes with the law, or have had experience with the care system, are intimidated by authorities, even at schools, she said. If a young person is having problems at school, a therapist can accompany the adolescent and mother to school to sort out the problem.
Multi-Systemic Therapy has been tried and tested in the UK and abroad and has strong ‘theoretical underpinning,’ said Barclay. The first trial of Multi-Systemic Therapy in the UK was run with funding from two grant-making trusts and the Youth Justice Board in 2003 by a North London charity, the Brandon Centre, which NPC first analysed in 2008. The trial has now received government backing and expanded across the UK.
‘Given that this is the first local authority social investment bond, and the first in children’s services, having pretty strong evidence from randomised control trials and theory gives a sense of confidence to both investors and commissioners,’ Barclay said. ‘It’s not just something that happened to work in one place because it had one fantastic charismatic leader delivering it.’
The programme hopes to treat 380 young people in Essex over five years. Simply put, investors will be repaid if those young people spend less time in care than they would have without the intervention, she said. Essex has set a benchmark by looking at historical data among people with similar problems, to understand how many young people ended up in care in the past. ‘We know what happened when MST wasn’t available,’ she said.
Outcome payments will begin three months after the first group of adolescents (about 20) have completed their MST programme. The payments will continue as long as the child remains safely in his or her home over a two and a half year tracking period, Barclay said.
‘We are looking for a reduction in time spent in care as a result of MST,’ Barclay said. ‘Investors will be paid on the basis of care placement days that have been saved.’ Other measures will also be tracked, including hoped-for improved school outcomes, improved well-being, and reduced reoffending, she said.
Essex County Council estimated its savings by averaging the expected costs of placing 100 youths into care, minus the running costs of the therapy program. Organisers anticipate that the social investors will be happy to reinvest their outcome payments back into the programme, thus boosting the initial outlay of £3.1 million to continue funding.
To manage the programme, Essex has set up a new company, Children’s Support Services Ltd., which will ultimately be responsible for tracking the success of the therapy program. Action for Children has been hired by this company, on behalf of Essex County Council. Action for Children is not being paid based on its outcomes, Barclay said, so as to avoid the possibility that managers would be tempted to pick the easiest cases.
Investors in the social impact bond are: Big Society Capital Ltd., Bridges Social Entrepreneurs Fund LP, Social Impact Bond Investors, the Charities Aid Foundation, the King Baudouin Foundation, the Social Venture Fund, the Tudor Trust, Esmee Fairbairn Foundation and Barrow Cadbury Trust.