HCT agrees payment by results deal with Lambeth
Children with special educational needs are being trained to travel to school on their own by social enterprise HCT Group under a new outcomes-based contract, designed to save money for local authorities.
HCT’s travel training scheme launched this week in Lambeth, south London, for up to 200 11 to 19-year-olds with special educational needs who, until now, have travelled to school by private taxis or minibuses.
Unlike previous travel training contracts run by HCT and others in the UK, this agreement is based on payment by results: Lambeth Council only pays when the children have achieved certain milestones.
This programme is tackling an important social problem in a way that provides better outcomes for beneficiaries and better value for local authorities
The scheme is up and running thanks to £420,000 working capital from the Bridges Social Impact Bond Fund run by Bridges Ventures.
Andrew Levitt, partner and head of the Bridges Social Impact Bond Fund, said: “HCT Group’s travel training programme is a perfect example of how social outcomes contracts should be used: it’s tackling an important social problem in a way that provides better outcomes for beneficiaries and better value for local authorities.”
Private transport for children with special educational needs costs local authorities around £6,000 for each child every year – equating, HCT estimates, to about £500m every year across the UK.
A proven track record
Travel training is a tested method which aims to help many children learn to use public transport independently. After being assessed as suitable, a young person is assigned a trainer who works with them individually over several weeks until they are ready to travel on their own. This not only saves money for the local authorities, but it also boosts the children’s independence and improves their ability to access other activities and employment.
HCT Group’s CEO Dai Powell said: “Travel training has a proven track record of helping children with special educational needs learn to travel to school independently, which has a huge and lasting impact on their quality of life. At the same time, it means local authorities are no longer exposed to an uncontrollable, open-ended and ever-rising cost. This contract with Lambeth is a big step towards demonstrating these outcomes at scale.”
Amanda Anderson, HCT's director of independent travel, said her team had worked with one young person who was able to move from a special school to a mainstream college once they had completed their training, and another who took up work experience and then got a part-time job thanks to his ability to travel on his own. She said: “It's a short intervention, but it has a big impact on young people and their families and carers.”
Bridges will provide HCT with ongoing management support during the contract and, as provider of the up-front funding, is taking the financial risk. Adam Kybird, investment manager at Bridges, explained that unlike some other social impact bond arrangements, particularly those in the USA, the first payments from Lambeth – if the necessary milestones were met – would be made within the first few months of the contract, rather than having to wait for years or more to monitor outcomes. Capital is therefore quickly recycled, meaning less working capital is needed at the start.
Kybird added that HCT and Bridges had worked hard to devise a solid agreement and that they were hoping to roll out similar projects across the country.
Levitt said: “With Lambeth Council’s help, we have developed a very simple, scalable model that delivers cashable savings in year one. We hope this convinces other local authorities to get in touch and find out how they can do the same.”
Header image: Young people like Charlotte can gain more independence thanks to HCT Group's travel training.