Financial Modelling

Local authorities have a statutory duty to provide accommodation and care for young people that are looked after until 18 years, and to provide support to care leavers up until 25.

The cost of accommodation represents one of the highest challenges to local authority budgets and often with little evidence of achieving good outcomes for the young people.

At 18 young people have to leave care anyway unless staying put is a real option. By giving people choice and ownership as to how they move to independence we can support them to live in their own accommodation from the age of 17.

The House Project approach provides intensive support and with the development of a community of support, for as long as is required, it replicates the principles of ‘staying put’ and staying close’. With skilled and experienced staff the project provides a safe step down from residential/foster care, allowing their support to be provided at lower costs.

House Projects deliver improved outcomes for young people at lower costs and reduces the demand on wider local authority and partner agency budgets with fewer tenancy breakdowns, improved emotional, physical and mental health and less contact with criminal justice services.

How does the LHP save money?

LHPs work with around 10 young people at any one time and provide an alternative to residential or foster care once they turn 17. Whilst the staffing costs have to be met, considerable savings are made from placement budgets. For example:

Sam is aged 16 and was in an out of area independent residential placement at a cost of £160k per annum. Sam wanted to return to his home local authority, but did not want to live in a family setting and would struggle to live independently in a flat. After an induction programme Sam moved in to the House Project property at aged 17. The local authority used £55k towards the cost of staffing and property. Sam remains in his flat and is a good council tenant. 

Amount saved by the Local Authority:
£105,000

Jane aged 16 was in a local authority foster care placement and wanted to live independently but was assessed as requiring a high level of support. By supporting Jane in to a House Project property on her 17th Birthday at a cost of £30k, the local authority was able to use the vacant foster care placement to bring back a young person placed in a costly residential placement out of area (costing £180k per annum). 

Amount saved by the Local Authority:
£110,000
By having three people like Sam and Jane in the project, the LA has saved in excess of…
£310,000

Phase 2 LHP funding

The five local authorities receive grant funding to support the setup of their LHPs. The monies fund the staffing costs which need to be in place to set the project up and to work with the young people leading to them being able to move in to their properties.

Financial modelling

It is undoubtedly the case the LHPs can, with the right young people, make significant savings to placement costs. The principle cost to the local authority is the establishment of the team prior to the realisation of savings. These costs can be met by:

  • Local authority invest to save budgets
  • Support and monies provided by the NHP on an invest to save basis knowing that the reduced social care costs and improved results will allow it to pay back its investment over 3 years (Social Impact Bond).

National House Project Budgets

The NHP is currently funded until 2020. Financial modelling is being established to ensure financial security in order to continue as a Charity and support the roll out of LHPs across the Country. There are four potential sources of income:

  • ‘Set up’ and ‘membership’ fees for which they receive the NHP Offer
  • Investment from social investors and fund managers which can then be provided to local authorities for a return via set up and membership fees
  • Philanthropic contributions
  • Donations. This is to be further explored
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