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Young People
  • Social Impact Bond
  • Child and family welfare
  • UK

East Midlands, United Kingdom

5 mins

DN2 Children’s Services Social Impact Bond

Last updated: 9 Dec 2022

The DN2 Children’s Services Social Impact Bond aims to provide children and young people aged between 10 and 17 with a stable and nurturing environment that is conducive to their well-being and improved educational outcomes.

Project Location

Aligned SDGs

Target population

Children and Young People aged 10-17 either at risk of entering care or in the care system

The problem

Children in need of care are found to face wide-ranging adverse outcomes throughout their lives, including in education, employment, health, and crime. In England, safeguarding these vulnerable children and young people is a statutory responsibility of local authorities under the Children Act 1989. However, reductions in central government grants, coupled with local authorities’ limited revenue-generating options, have resulted in significant budgetary constraints to provide these vital services over the years. In particular, local authorities deploy substantial resources to support a small cohort of children and young people with the most complex needs.

While the rate of looked after children under 18 per 10,000 children varies widely across DN2 areas (Nottinghamshire: 59, Nottingham: 99, Derby: 108), the combination of rising child populations and their increasingly complex needs have translated into a rise in demand across 3 authorities. Notably, the number of children in care has increased by 25% between 2017 and 2020 in Nottinghamshire, reaching 1,000 for the first time. While the number appears to have stabilised after peaking in 2020, the pandemic also introduced further instability in the children’s social care system.

Reflecting the limited supply of internal placements, a marked increase in use of high-cost external services including residential homes has further added to existing budgetary pressures in services targeted at children and young people, currently constituting 18% of Nottinghamshire Council’s annual budget.

The solution

Against the backdrop of rising demand amidst budgetary pressures, a rethinking of commissioning approaches was necessary. Under the commitment to remodel children’s social care, Derby City Council, Nottingham City Council and Nottinghamshire Country Council (DN2) have built an innovative regional partnership in 2016 to improve outcomes for vulnerable children and young people.

DN2 Children’s Services Social Impact Bond is a product of this partnership and aims to provide children and young people aged between 10 and 17 with a stable and nurturing environment that is conducive to their well-being and improved educational outcomes. This evidence-led and practice-informed programme introduces a new model of commissioning through a social impact bond (SIB), linking payment to outcomes over a two-years period across 4 targeted interventions. The interventions are predicated on the proven hypothesis that young people achieve better outcomes if they live in an appropriate family environment and thus seek to:

  • prevent children being taken into care; or to
  • support reunification back with birth parents / carers.

Or, if the young person is in long-term care:

  • to support children to remain living with a foster family (and thus prevent escalation into residential care); or
  • to support in enabling a child to step down from residential care into foster care.

Outcome payments are made from the Life Chances Fund (27.5%) and local councils’ budgets (72.5%).

The impact

Despite the delay in launching the programme, which ultimately led to it commencing during the pandemic, the programme reached 56 children and young people during its first year, above the minimum number of 55 stipulated in the contract with the provider. The mix of referrals across the 4 cohorts has proven to be different to that envisaged with a far greater proportion being to support young people in care to remain with foster families. This reflects one of the impacts that pandemic has had on overall foster care capacity and on foster placement stability. The provider and investor have helpfully recognised the need for this flexibility within the overall total of referrals across the programme.

In addition to providing children with stable environment and improving their outcomes, this programme also has a potential to incur fiscal savings through preventing costly entries into residential care (average cost over £4,000 per week) and stabilising foster care (average cost less than £1,000 per week). The weekly outcome payments payable via this programme in order to prevent escalation from foster care to residential home care results in a mix of cashable savings and significant cost avoidance. Within Nottinghamshire, these savings from the programme are reported through monthly project and financial monitoring processes. At present, the Council’s Medium Term Financial Strategy reflects £250,000 savings attached to this SIB programme for the two fiscal years 2021/22 and 2022/23.

An impact evaluation was planned for September 2022, coinciding with the completion of one full cycle of the project delivery (up to 2 years). Stakeholders plan to procure an external evaluator through the accumulation of the Life Chances Fund grant.

Outcomes Framework & Progress in Year 1

The programme targets 4 different cohorts of children and young people and delivers tailored interventions, outcome payments of which are made per full week of children being out of different types of care. The diagram below shows the breakdown of referrals for each authority and cohort group, along with the contractual minimum.

Chart for Case Study East Midlands DN2 IMpact Bond


  • February 2020

    Expected start date of service provision

  • October 2020

    Start date of service provision

  • October 2026

    End date of service provision

Project insights

  1. Collaborative relationships in the region are key to improved outcomes for children

    Regional collaboration between neighbouring councils has been fundamental to the identification of appropriate areas for tactical commissioning. This resulted in shared resources, intelligence, and strategic and operational planning, subsequently enabling the launch of this programme that would have not been viable for 1 local authority.

    However, as each council has a statutory responsibility to provide children’s social care, working across 3 different authorities raises practical issues around data-sharing and coordination. Stakeholder overcame these constraints through assigning a single point of contact in each council, who oversees dialogues between various stakeholders and facilitates coordination to ensure that appropriate referrals are accepted to the programme. Despite the pandemic disrupting face-to-face communications, the development of SIB has deepened collaborative relationships across 3 councils.

    While this SIB is one of many potential areas for joint commissioning within DN2 and D2N2 (including Derbyshire County Council), it is envisaged that it facilitates a creation of an outcome-focused market through driving collaboration between commissioners and providers.

  2. An adequate lead time must be secured to operationalise the service delivery

    According to stakeholders, the biggest challenge in the first year of this programme was the lack of lead time between award and the start of service delivery. The contract was awarded to Polaris Community after 2 years and 5 months from due date, owing to challenges in securing social investors. In effect, a further delay of 7 months amidst the pandemic meant that the programme had to be in operation before having the time to fully operationalise its delivery. This has resulted in overwhelming the capacity of the provider, creating a backlog in their system.

    Relatedly, it is important to account for the need for adjustments and revisions to the plans when developing a timeline for the programme in children’s social care. For instance, the initial plan for the 3 month-long intensive care for children in residential care has proven to be unrealistic due to increasingly complex needs of these children. Stakeholders therefore recommend securing an adequate time of about 6 months, so that resources can be effectively mobilised.

  3. Evaluation needs to be informed by feedback from children and other stakeholders

    In planning an evaluation, stakeholders also highlight the importance of qualitative information about the service delivery and outcomes. Given the complex nature of children’s needs, some aspects of this programme cannot be fully quantified. Feedback from participants and other stakeholders can sometimes be dismissed as anecdotal, but for children receiving care, stable support lasting up to 2 years is potentially a life-changing opportunity. Qualitative information should therefore complement more formalised means of evaluation.

Contact details

  • Lynn Brammer (Category Manager – Children and Family Services, DN2 Contract Lead Chief Executives Department, Nottinghamshire County Council)
  • Jon Hawketts (Project Lead, DN2 STARS Programme, Nottinghamshire County Council)

This case study was prepared by Yuko Ishibashi.