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Financing co-produced and innovative partnerships using Social Impact Bonds

Financing co-produced and innovative partnerships using Social Impact Bonds. Lessons from Essex SIB: how they can be applied to make a range of interventions with children at the edge of care more easily accessible to all commissioners. The rationale for the Essex SIB: .

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Financing co-produced and innovative partnerships using Social Impact Bonds

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  1. Financing co-produced and innovative partnerships using SocialImpact Bonds Lessons from Essex SIB: how they can be applied to make a range of interventions with children at the edge of care more easily accessible to all commissioners

  2. The rationale for the Essex SIB: • Need: high numbers of children in care 1,600 52/10,000 (Nov 2011), high cost, poor outcomes • Performance: Government Intervention, Inadequate for Safeguarding & Looked After Children • Savings: budget deficits, history of failed internal investment • Investment: upfront, payment from savings, off the balance sheet • Risk: risk of failure deferred to investor • Service system: shift towards prevention, evidence-based and solution focussed, building family strengths and resilience, reducing future dependence and demand • Targeted: where the system most needs it, where risk of failure is higher, where savings are most cashable • Transformation: sustainable and outcomes driven, outcomes-led commissioning, council transformation

  3. The Essex SIB: • CSSL and ECC enter Outcomes Contract Investors • Investors fund CSSL • Funds released to service providers according to Service Provider Agreement £3.1 million CSSL Outcomes Contract • Board of Directors • ECC returns a % of savings from reduced cost of care placements Social Finance ECC Ongoing operating funds Service Contracts Action for Children Evolution Fund Services Service Users

  4. The Essex SIB: • Target: Young people on the edge of care or custody • Intensive evidence-based interventions: 2 Multi Systemic Therapy (MST) Teams • Provider: Action for Children • SIB intermediary: Social Finance LTD • Special purpose vehicle: Children’s Support Services LTD • Contract: 5 years operational 8 years payment • Social investment: Initial £3.1m growing to around £5.9m throughout project life

  5. The Essex SIB: • Referral capacity: 380 families • Performance target: 110 young people diverted from care or custody • Primary Outcome Metric / Payment Trigger: The reduction in aggregate care days spent as compared to the counterfactual • Counterfactual: review of 650 cases from referral window, at least 30 months in the past, establishing performance benchmark pre-MST • Projected savings: £17.3m gross over the life of the scheme • Costs: Capped at £7m • Savings: £10.3 net • Contract: November 2012 • Mobilised: April 2013

  6. Market barriers: • Complex commissioning: co-development, compliance and competition • Opaque pricing: price specification, value for money, cost benefit comparison • Limited deal flow: low take up from Local Authorities • Scale of investment: majority of Local Authorities are small, investments too marginal to be attractive or cost effective • Timeliness: long development lead in, out of step with pressing need, sustaining project momentum • Provider market: scarcity of providers able to work within an outcomes based framework, evidence-based approach

  7. Opportunities: • Cross sector similarity: edge of and in care populations have similar characteristics nationally within acceptable thresholds, i.e., average cost of placement, length of stay, distribution of placement type, % rise in care population • Big data: availableSSDA903 returns, LAIT, Cabinet Office Unit Cost Data Supports: • Standardisation: ofmodel and metrics, support specification, price transparency, timely implementation, ease of procurement • Scale: investors distribute funds across multiple schemes with same risk and return profiles

  8. C • Commissioners £ S • Scaled Investment Fund • Service Providers

  9. Multiple Commissioners C • Commissioner £ S • Investment Fund • Service Provider

  10. C • Commissioner • Dynamic Procurement • System £ S • Investment Fund • Service Provider • Interventions • Delivery Partners

  11. C • Commissioner • Scaled • Managed Fund S £ • Service Provider • Investment Fund • Charities • Funds Companies • Private

  12. C • Commissioners £ S • Scaled Investment Fund • Service Providers

  13. C • Commissioner S £ • Service Provider • Impact Investors

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