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  1. New Models of Delivering Public Services: Social impact bond (SIB) master-class Social Finance is authorised and regulated by the Financial Conduct Authority FCA No: 497568 20TH November 2013 Yvonne Campbell, Essex SIB Director Yvonne.campbell@socialfinance.org.uk

  2. About Social finance Our mission is to identify sustainable and scalable funding models to tackle entrenched social problems GOVERNMENT INVESTORS SOCIAL ORGANISATIONS • Social Issues VOLUNTARY SECTOR DEVELOPMENT LONG TERM SOCIAL GAIN SOCIAL INVESTOR MARKET GROWTH one area of our work has been to develop outcome-focused finance – social impact bonds

  3. Introduction to Social Impact Bonds (SIB’s) Social Finance is authorised and regulated by the Financial Conduct Authority FCA No: 497568

  4. Introduction to Social Impact Bonds • The Social Impact Bond is a means of investing in intensive prevention services where improved social outcomes are likely but not certain. • Social Impact Bonds are contracts with public sector commissioners under which government commits to pay for improved social outcomes. • On the back of this contract, investment is raised from non-governmental investors. • This investment is used to pay upfront for a range of interventions to improve social outcomes. • Investors are repaid only if successful outcomes are achieved. Investors stand to lose some or all of their capital if positive outcomes are not achieved. • The investor takes the risk that the interventions do not deliver the desired outcomes. The greater the improvement, the greater the financial return to investors. Social Impact Bonds bring new investment to bear on social issues, and align all parties around a common goal.

  5. Rationale for a sib Social Impact Bonds provide up front funding to pay for additional services to help improve outcomes for service users, with investors risking their money based on the outcomes that will be achieved

  6. The value for money case for a social impact bond SIBs work when the cost of achieving the target outcome are substantially less than the resulting public sector saving. Public Sector Saving £ Savings retained by Govt. Impact of SIB Investor return Cost to Government Net Cost to Government Cost of Interventions Cost Saving Status Quo SIB

  7. Essex Social Impact Bond for Children On the Edge of Care Social Finance is authorised and regulated by the Financial Conduct Authority FCA No: 497568

  8. Essex social impact bond – core intervention Multisystemic Therapy (MST) forms the core intervention in the SIB. It is one of the most promising interventions for the adolescent edge of care and custody population. Source: www.mstservices.com/outcomestudies.pdf

  9. Essex SIB Structure Investors • SIB Co and LAs enter Outcomes Contract 1 2 £££ • Investors fund SIB Co 2 1 • Funds released to service providers according to Service Provider Agreement SIB Co Outcomes Contract 3 Board of Directors Social Finance Local Authorities Essex SIB Investors 4 • LAs return a % of savings from reduced cost of care placements 4 Ongoing operating funds Service Contracts 3 Action for Children Evolution Fund Services Service Users (380 young people)

  10. Governance Structure SIB DIRECTOR (CONTRACT AND PERFORMANCE MANAGEMENT)

  11. PRIMARY OUTCOME METRIC THAT TRIGGER PAYEMNT: CARE DAYS SAVED What would have happened anyway? % of aggregated care days as per the historical control group A What happened as a result of the MST intervention? % of aggregated care days of those who received MST B What do Essex pay for? Difference between A & B C

  12. SECONDARY OUTCOME METRIC THAT DO NOT TRIGGER Payment:

  13. Need: high numbers, high cost, poor outcomes Services: shift towards prevention, building family strengths and resilience, reducing future dependence and demand Innovation: new funding mechanism, services new to Essex Investment: upfront, off the balance sheet Savings: unlocking acute spend, efficiencies and re-investment Risk: risk of failure deferred to investor Performance: Enhanced by PbR approach System change: sustainable and outcomes driven, outcomes-led commissioning, council transformation WHY ESSEX TOOK THIS APPROACH

  14. KEY CHALLENGES TO DATE • Relationships • Understanding individual roles and their part within the structure – not a typical contracting relationship • Increasing awareness of SIB service(s) to improve engagement and flow of referrals • Referral Pathway • Stakeholder buy-in and continual communication at all levels • Shared understanding of the eligibility criteria terminology • Fit within the wider services landscape • Ensuring the effectiveness of the referral pathway • Right cases at the right time • Parts of the process and responsibilities at which stage, • Ensuring no delays in families getting the help they need due to process

  15. KEY CHALLENGES TO DATE • Data • Access to data and governance issues • Data collection resource • Quality of data entry • Technical issues • Staff • Specialist skills required, which required multiple rounds of recruitment • Staff burn-out and turn over • Enhanced engagement skills • Investor’s Journey • Engaging them in the challenges • Providing opportunities for them to develop their own understanding of the issues relating to the service users

  16. Ingredients FOR A SUCCESSFUL SIB Buy-in and strong relationships across the partnership Identified fit within broader services landscape Effective referral pathway that facilitates the required volumes and identified target population Robust data collection agreements and system Strong delivery provider, willing to try doing things a different way Robust intervention quality assurance Considered investor journey Realistic Expectations A SUCCESSFUL SIB