Councils working on the troubled families initiative are to be split into three groups next month depending on their success in supporting their allocated quota of families - it has emerged.

Project co-ordinators in all 152 upper-tier English local authorities were this week sent details on how attachment fees will be paid ahead of the second year of the £448m three-year payment-by-results programme.

So-called ‘Group 1' areas, working with 75% of their agreed first year allocation of families, would have their Year 2 attachment fees paid in full within the first quarter of 2013/14.

Authorities working with between 33% and 75% of their Year 1 families would have  half of the second year's fees paid in the first three months after April – with the remaining money to be paid between July and September if they have caught up with their quota by then.

However, authorities found to be working with less than a third of the families they agreed to support in 2012/13 would not receive Year 2 payments until they had demonstrated considerably improved performance.

A spokesman for the DCLG-based troubled families unit said: ‘We expect around half and probably  a majority of authorities to be Group 1, and at most a handful, possibly none, in Group 3.'

Separately, the DCLG has issued a financial analysis on the estimated annual £9bn cost of supporting families with chaotic personal lives.  According to the findings, the lion's share, some £8bn, is spent reactively on areas such as child protection (£3.5bn) and criminal justice (£2.5bn). 

By comparison, only £1bn of Whitehall spend is targeted on troubled families in areas such as education and Sure Start early years intervention schemes (£440m).