Nick Clegg, the Deputy Prime Minister, has announced £31m of government funding to set up social impact bonds to help disadvantaged young people.
Social impact bonds are financing mechanisms that seek non-government investment for social interventions. If the interventions are successful, the government commits to repaying and rewarding the investors.
Clegg said yesterday that the government would provide the funding for new social impact bonds through two programmes aimed at helping 14 to 24-year-olds improve their employment prospects.
The Youth Engagement Fund, which will receive £16m of funding, is designed to support up to 18,000 young people in more than 100 schools in England to improve their skills and employability.
The £15m Fair Chance Fund has been set up to move more than 2,000 homeless young people into sustainable accommodation, and help them get into employment, education or training over the next three years.
The Cabinet Office said that the type of schemes that would be funded by the cross-departmental programmes were likely to include those that reduced long-term dependency on benefits, reduced the risk of offending, or helped homeless young people find sustainable accommodation.
"Our £30m package opens up the chance for people to invest in programmes that deliver real results," said Clegg. "It means that thousands of young people struggling in schools or living on the streets will have the support they need to improve their educational achievement, get employment and get into sustainable housing."
Nick Hurd, the Minister for Civil Society, said that Britain was leading the world in using innovative finance models to tackle social problems and transform people’s lives.
"Through social impact bonds, we are opening up resources to communities, businesses and charities to help change the lives of vulnerable people," he said. "With more than seven central government departments involved in the two programmes, we are taking a whole-of-government approach to supporting this group."
The Cabinet Office has also announced that it has given out more than £2.5m in funding to support 26 volunteering programmes that will support vulnerable young people.
The department said the funding, which was for between £45,000 and £250,000 a time, would provide help for groups including young offenders and care leavers.
The funding comes through the government’s Vulnerable and Disengaged Young People Fund, part of up to £40m of funding that will be invested in innovative programmes through the Centre for Social Action.