Allen Early Intervention Review (Part 2)

I recommend that government sets out, as its policy ambition for Early Intervention, that in order to reach its social and economic goals, all babies, children and young people should have the social and emotional bedrock essential for their future development and their ability to make effective life choices. I further recommend that this ambition should set the tone of the Families in the Foundation Years statement due this summer.

I recommend that, beginning with the 27 existing Early Intervention Places, local areas should drive the work of the independent Early Intervention Foundation to start the process of procuring the services, develop core evidence building, fidelity and outcome measurement functions, and that they should be strongly represented on its board.

I recommend that, given the public expenditure situation, we need to be much more creative in finding additional (not substitute) non-government money. The social goal of Early Intervention and the design of new instruments should be tightly coupled together so that the instruments do not lose their raison d'être, as happened in the past with Private Finance Initiatives. This will require outcome-based contracts coupled with external investment. Government and local areas can pay for results from the savings that they will make.

I recommended that the Social Justice Committee commissions the Early Intervention Task and Finish Group (see Recommendation 5) to work with the Early Intervention Foundation to assess the financial and economic value of outcomes, to inform better decision making by commissioners of services. This should also assess the extent to which cashable savings can be made, to whom the savings would accrue and over what timescale.

I recommend that central and local government agree to pay Early Intervention outcome-based payments (where savings accrue to them). Specifically, I recommend that: • HM Treasury and departments develop methods of accounting to ensure that future payments based on successful outcomes will be honoured from their departmental budgets; and • the Department for Communities and Local Government, and the Chartered Institute of Public Finance and Accountancy (for Local Government) develop a method of accounting to ensure that future payments based on successful outcomes will be honoured, and that incentives are in place for local areas to utilise outcome-based contracts.

I recommend that, through pilots and agreeing to pay for outcomes, government enables private money to be attracted to Early Intervention through the establishment of an Early Intervention Fund or Funds in close co-operation with the Big Society Bank, which over time can be developed to offer investors a diverse range of Early Intervention products. This should be driven forward by government, local areas and the Early Intervention Foundation, working with fund managers such as social intermediaries or banks.

I recommend that this initial fund should look to raise around £200 million of investment, although in the first instance £27 million would enable the Early Intervention Places to begin with pilots over the current Comprehensive Spending Review period.

I recommend that central government supports local areas to pilot different ways of contracting for Early Intervention outcomes, and that when a fund is available they pilot the use of this fund.

HM Treasury should encourage councils, in association with financial institutions, to produce practical yet innovative locally based financing ideas for Early Intervention. Should economic circumstances allow, this could include putting together an innovative collective bond issue on Early Intervention to kick-start a revived local authority bond market. To facilitate this, ministers would need to issue a Capitalisation Directive to councils that allows up to £(less than 500) million of Early Intervention spending to be capitalised, provided that it is funded through the local bond market.

I recommend that HM Treasury should commission a thorough review of Early Intervention growth incentives ahead of the 2012 Budget to assess what more the tax regime can do to enable all relevant investor groups, including high net worth individuals, social and philanthropic investors, businesses and retail savers to support Early Intervention investment. This should include: • incentives relating to Capital Gains Tax; • incentives relating to Corporation Tax; • lessons learnt from tax credits as part of the Dutch Green Funds Scheme; • allowing local authorities the right to borrow against cost savings from outcome-based contracts (similar to tax incremental financing); • Community Investment Tax Relief; • a cash-limited Early Intervention Tax Credit; and • accreditation for Early Intervention ISAs and increased ISA allowances for Early Intervention investors.

I recommend that when the Early Intervention Foundation is in place, it initiates serious all-party discussions on Early Intervention to agree on actions to maintain and promote long-term commitment to Early Intervention.

I recommend that there is the strongest possible commitment from political leaders to a culture change from late intervention to Early Intervention, building on the political momentum generated, not least by the recent Field, Tickell, Munro and Allen reviews. To this end, I recommend that there should be an annual statement to Parliament accounting for the progress made and projected on the policies, programmes in place and expenditure on Early Intervention.

I recommend that government, when planning the next Comprehensive Spending Review, should consider making Early Intervention its theme, and that work undertaken by a Treasury-led team should signal a decisive rebalancing of central government spending from late intervention to investing in Early Intervention. I believe that steady and incremental migration of funding – I would propose by 1% – per annum would signal government's commitment to do this.

I recommend that the Families in the Foundation Years statement must include regular and purposeful assessments for the 0–5s, focusing on measuring social and emotional development to enable all children to attain 'school readiness'. I further recommend that 'school readiness' should be adopted as an intended outcome from Early Intervention and be used as a measure, or basket of measures, of the impact of investment and the extent of savings, and thereby as an incentive for further investment.

I recommend that there should be an Early Intervention Task and Finish Group reporting to the Social Justice Cabinet Committee. This could be a dedicated team of experts with representatives from major spending departments, the Cabinet Office and HM Treasury. It should also have external secondees from providers and financial organisations. This group should co-ordinate the currently disparate activity on Early Intervention and social investment and communicate lessons learnt to government departments. Working closely with the independent Early Intervention Foundation, it should ensure consistency in the establishment of Early Intervention outcomes that are important to government, jointly agree the standard of evidence needed to measure whether these outcomes have been achieved, and improve data on measures, outcomes and cashable savings to allow Whitehall and local areas to attach payments appropriately to outcomes.

I recommend that the systems and organisations arising from the NHS changes give priority to Early Intervention, with health and well-being boards providing leadership for Early Intervention's contribution to health and well-being in every locality.

The Early Intervention agenda is driven by local action. I recommend that government continues to support the joint working between the local Early Intervention Places and Community Budget areas which has arisen since the first Report. I further recommend that central and local government players agree how existing Community Budget areas should focus on Early Intervention alongside their work on families with multiple problems as soon as possible. The 27 Early Intervention Places that are not yet Community Budget areas should become part of this work at the earliest opportunity, and all Community Budget areas should be encouraged to focus on Early Intervention as a priority.

I recommend that ministers take a positive leadership role on the independent Early Intervention Foundation in encouraging local areas and philanthropic and private institutional investors to continue their exploration of setting up a Foundation to complement, from the outside, the work that is beginning inside Whitehall.

I recommend, once the business case is fully worked up, the creation of a £20 million endowment to sustain an independent Early Intervention Foundation and that the Prime Minister issues a bold challenge to external funders from the private, charitable and local government sectors that if they create an Early Intervention Foundation to drive progress, government will support them with co-funding.