Nearly 33,000 children were taken into care in the year to March 2017, the biggest annual surge for seven years. This is not only expensive for local authorities (residential care typically costs around £200,000 per year per child). It also means the child is more likely to develop problems at school, with their health, and in their relationships with others.

Three years ago, the Greater London Authority teamed up with specialist advisor Social Finance (with Big Lottery Fund support) to help the London boroughs explore a new approach: using specialist therapeutic interventions to keep families together and the young people out of care.

These interventions have delivered good results for adolescents with severe anti-social behaviours, both in the UK and in the US. So the proposal here was for a payment-by-results model, whereby the boroughs would only pay if the young person could remain home in a safe environment.

Ultimately, five London boroughs – Sutton, Tower Hamlets, Bexley, Merton and Newham – decided that this approach was appropriate to their local needs.

Together, they co-commissioned a joint programme, which we’ve called Positive Families Partnership. We’re aiming to work with over 350 families over the next five years: the therapy programmes will be delivered by three experienced specialist providers (Family Psychology Mutual, Family Action, and the South West London & St George's Mental Health NHS Trust), supported by our central project management team.

Each course of therapy takes roughly three-five months. After that, the young person will be monitored for a two-year period. For every week they remain out of care, the relevant borough will make a payment to us. But if the therapy doesn't prevent the young person going into care, for whatever reason, the boroughs don’t need to pay.

These ‘social outcomes contracts’ (or ‘social impact bonds’ as they’re sometimes called) have two important advantages for local authorities.

First, it gives providers much more flexibility. With a standard ‘fee for service’ contract, the delivery model is often tightly circumscribed. With outcomes-based contracts, the quality assurance, oversight and monitoring structures involved make it much easier to identify and then address any delivery problems. Our therapists are dealing with complex, changeable family situations. Having the freedom to adapt and improve our approach increases the chances of achieving successful outcomes for each young person (which in turn saves money for the borough).

Second: to fund the working capital gap until outcomes payments are generated, the provider usually joins forces with a specialist social investor – in this case Bridges Fund Management – who understands the sector, shares their motivations, and can support the management team. So the boroughs can effectively transfer some of the financial/ operational risk to an engaged investor, who has a clear incentive to deliver great outcomes.

This partnership approach is already delivering promising results for children’s services departments. The first programme of this type was launched in Essex in 2012; based on the lessons learned in the first year, Bridges and the provider were able to improve results by (for example) investing in improving referral pathways, providing extra training opportunities for therapists and employing extra staff to maximise capacity. Other outcomes contracts have since been commissioned by Children’s Services in Manchester and Birmingham, drawing on these lessons.

However, we’re particularly excited about Positive Families Partnership because it’s the first time five local authorities have co-commissioned one of these contracts. If the programme succeeds in delivering better outcomes for young people on the edge of care – while also demonstrating how collaboration and innovation can help local authorities deliver better value for public money – we hope many more will follow, both in London and beyond.

Brigitte Squire is programme director of Positive Families Partnership