£4.5m Social Impact Bond for Merseyside

Triodos Bank , GMCP (Greater Merseyside Connexions Partnership) and Business in the Community win £4.5m DWP Innovation Fund payment by results contract to help support young people in Merseyside who may be unemployed or at risk of unemployment

Triodos Bank , Greater Merseyside Connexions Partnership (GMCP) and Business in the Community (BITC) are working together to deliver an innovative three year programme called “New Horizons” targeted at some of the most vulnerable young people in the Merseyside area.

Young people are our future workforce and our goal is that every young person, particularly those facing social disadvantage, receive support from business to build the skills and confidence needed to gain and sustain employment.

The New Horizons programme aims to improve educational, training and ultimately employment outcomes for 3,900 young people, many of whom will be young offenders, have learning disabilities, or be in or leaving care The programme will use a blend of interventions including one-to-one coaching aimed at improving ‘mental toughness’ and resilience in individuals so that they can self-sustain their own development and progression into suitable employment.

The Innovation Fund is a newly launched DWP initiative aimed at encouraging social service delivery organisations, financial intermediaries and private sector investors to work together to design and finance programmes which can help improve employment outcomes for the most vulnerable young people in society. The DWP acts as main contractor and guarantor of a payment by results contract. Unlike typical social service delivery, the funding is provided at risk by private sector social investors, who only achieve a financial return if pre-agreed educational, training and employment outcomes are met.

Triodos Bank’s corporate finance team acted as lead adviser on the deal and in partnership with GMCP raised £2 million of funding for the programme in the form of a Social Impact Bond from a syndicate of leading UK social investors, including Big Society Investment Fund. GMCP, who are a leading and longstanding social delivery organisation in Merseyside designed the New Horizons concept and will be in charge of delivering the programme on the ground in partnership with a small group of other local service providers. Triodos will retain a role in the financial management of the three year scheme on behalf of investors.

Minister for Work and Pensions, Iain Duncan-Smith commented, “The first round of Innovation Fund contracts we have awarded should offer a win-win solution, whereby private sector funding will allow us to test out innovative social programmes which are targeted at the most vulnerable. We’re delighted to see ethical financiers like Triodos working in partnership with credible delivery organisations like GMCP to have the greatest impact on communities in Merseyside.

Dan Hird, Head of Corporate Finance at Triodos commented, “This has been a groundbreaking and well organised initiative by DWP as the scheme offers good value for money for the taxpayer because Government will only pay out if positive outcomes are actually achieved. It has been great for us to work with a highly professional service delivery partner in GMCP who can significantly help to transform the lives of thousands of young people. There is a genuine opportunity now for Social Impact Bonds to become more widely used financial instruments in addressing social problems at a meaningful scale.

Raksha Pattni, BITC’s Regional Director for the North West said: “Business in the Community is delighted to be part of the New Horizons programme and we look forward to working with The Greater Merseyside Connexions Partnership, Tridos Bank and our member companies to support young people in Merseyside. Young people are our future workforce and our goal is that every young person, particularly those facing social disadvantage, receive support from business to build the skills and confidence needed to gain and sustain employment.”

“BITC has 30 years’ experience of working with communities and New Horizons will fit perfectly with our existing education programmes running in the region as well as our work with businesses to identify solutions that create long-lasting employment opportunities for young people leaving care.”