A pilot payment-by-results scheme to prevent young people from slipping out of education and into unemployment is claiming success in GCSE results.
Social investors are funding charities to work with young people at high risk of becoming NEET – not in employment, education and training.
If they achieve targets, including GCSE results, investors will be repaid by the Department for Work and Pensions.
Among over 300 teenagers in a pilot scheme, 55% achieved five A*-C GCSEs, meaning that this project in east and north London achieved above the target of 30% of the at-risk young people reaching this benchmark.
The project is aiming to prevent 8 out of 10 vulnerable youngsters in the UK, of which around 9% of children are classified as NEET, from becoming NEET.
This experimental scheme is based on the amount of taxpayers’ money that can be saved if young people can be steered away from becoming Neets. But instead of the government funding the scheme directly, social investors provide the initial capital. In the London project, investors Big Society Capital and Impetus-PEF provided £900,000 for work carried out by a charity, Tomorrow’s People.
The project, unlike the effects of the Olympics, has not just been successful in London. Another scheme in Merseyside, with funding from the Triodos ethical investment bank, is also reporting GCSE results above the target. This charity worked with teenagers identified as being potential Neets, with the aim of supporting them in school, with their success measured in terms of exam results, behaviour and attendance.
The funding cycle will mean that the Department for Work and Pensions (DWP) will pay back the social investors, plus a small extra payment. The amount paid by the DWP will be no more than £8,200 over five years, compared with an estimated £97,000 cost to the taxpayer for each additional youngster who becomes Neet. This model is designed to support such charity projects while minimising financial risk to the taxpayer.
Big Society Capital, a social investment bank, was set up last year, with assets including £400m from dormant accounts abandoned in banks for more than 15 years. It aims to put finance in reach of social sector projects.
Chief executive Nick O’Donohoe said: “This year’s GCSE results are an encouraging indicator of how effective this programme is at supporting some of our most vulnerable young people into education and training. The model allows charities to deliver innovative preventative programmes that can deliver significant social benefits and cost savings, with social investors such as us taking the financial risk and government only paying if it works.”
Well all this looks encouraging for the London and Merseyside pilot schemes, but these are two highly populated areas in the UK where local schools are a plenty, but no pilot scheme of this nature has been reported in areas that are less affluent and smaller populated. It would still be a risk to roll this program out nationally until the odds stack up. While the money side may stack up (savings of almost £90k), it may not actually work in all areas, which could mean that other schemes or methods may need to be looked at and piloted to find other ways of saving.