Councils consider social impact bond to reduce number of children in care

Social Finance says bonds might be introduced in Liverpool and Essex

Plans to reduce number of children in care
Plans to reduce number of children in care

Two local authorities are thinking of using social impact bonds to improve family support services, according to Social Finance, the consultancy that devised the bond.

The first pilot of the bond, which pays investors according to the success of projects, has already begun with a £5m project to prevent reoffending in Peterborough.

Toby Eccles, development director of Social Finance, told Third Sector that Liverpool City Council and Essex County Council were also considering using the bond.

"We're now working formally over the next six months with the two county councils to look at whether the social impact bond can be used to improve outcomes for vulnerable children," he said. "The product would likely use a payment based on a reduction in the number of children in care."

The social impact bond works by a charity or other third sector organisation entering into a contract with a council or government department, which agrees to pay for improved social outcomes in a target group, over a target time period.

In the new cases, the targets be reducing the number of children in care in a part of Liverpool or Essex after a number of years. The better the results, the more the council would pay out.

The charity uses the contract to raise finance from social investors. If the charity hits its targets, its investors make a profit.


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