I’d like to welcome everyone to the first Innovation Fund bidder event here in London.
We will be taking these events around Britain over the course of this week, talking to potential investors and delivery organisations about our plans for the Fund.
And we hope that you’ll take these opportunities to speak to each other as well, sizing each other up and assessing whether you could form a valuable partnership going forward.
I’d like to start by reiterating why this is so important.
The Innovation Fund exists to find and fund organisations that are able to work with disadvantaged young people to turn their lives around.
And this is one of the most significant challenges we face in our country at the moment.
Even as we see some signs of promise in the labour market there is still a real challenge for young people, some 600,000 of whom are unemployed and not in full-time education.
And while the recession has made things worse, this is a problem we have been dealing with for some years now.
Just before the recession, unemployment amongst 18-24 year olds was actually higher than it had been five years earlier.
And although many more young people are staying on in education, employment rates for 16-17 year olds who’ve left school or college have deteriorated substantially over the last decade or so.
Back in 2000 around six in every ten were in work.
That figure is now down to just over three in ten.
As I say, this wasn’t just a product of the recession - by 2008 the level had already fallen to five in ten, so it has been on a steady downward trend over the course of the last ten years.
Of course these statistics don’t reflect the fact that these numbers apply to an ever smaller group - as more young people have stayed on in education, so the number of NEET young people as a proportion of the population as a whole has fallen.
But what it does tell us is that we will need even more effective - and, importantly, even more innovative - solutions for the remaining group of young people who are not engaging in education, employment or training.
Support for young people
We’ve already put a number of programmes in place to give young people the extra support they need to take those first steps into further learning and work.
We’re investing in more education and training provision and have secured funding for an extra 40,000 apprenticeships targeted specifically at young people.
We are also working with businesses to provide up to 100,000 work experience opportunities over the next two years.
At the same time, young people will be able to get early access to the Work Programme, reflecting the fact they need more intensive support to find a job.
The Innovation Fund
But the Innovation Fund is about offering something a little bit different.
I just want to touch on two important areas.
First, the fund is targeted at young people aged 14 or over.
In the past, government has been too slow to engage with the employment prospects of young people before they hit 16 - or even 18.
In line with the government’s plans to increase the age of participation in education or training, the Fund’s focus for those who are not yet 18 will remain on supporting them to succeed in learning - but this support will also have to be focussed on improving employment outcomes further down the line.
This is about getting in there early, understanding that the warning signs for poor employment prospects as an adult are often in place as early as 14 or 15.
Investors take the risk
The second thing that’s different about the Innovation Fund is the funding model.
We are inviting investors to partner with delivery organisations in submitting their bids, providing the funding and taking on any risks associated with the project.
If they are successful they will get a return from Government, but we will only pay for outcomes - in other words we’ll pay for what works.
Payment by results isn’t new of course - this is the model we are using in the much larger Work Programme - but the key difference here is that the investors take on the risk, freeing the delivery organisations to get a guaranteed income for doing what they do best.
I hope this will encourage smaller organisations in the voluntary sector to come forward and take the opportunities provided by the Fund.
This is what we mean by social investment - unlocking private finance in pursuit of the social good - and it’s an exciting time to be involved.
Just yesterday I spoke at the launch of Graham Allen’s second report into early intervention.
The government will have to look at Graham’s recommendations closely, but what is clear is that using the tools of social investment to deliver early interventions for young people could prove a big cost-saver for Government, as well as having a huge impact on our local communities.
But now here’s the challenge: bids to the Innovation Fund have to be genuinely innovative, and they have to offer something which doesn’t just duplicate existing programmes.
We need bidders to be thinking about how their support will really add value to existing provision.
Get this right now, and the Innovation Fund could be a foundation for a powerful new partnership between investors, Government and delivery organisations in the years ahead.
A partnership for:
- raising the finance
- providing the expertise, and
- delivering the results that young people in Britain really need.