Centre for Economic and Social Inclusion: Social Impact Bonds: Can they work for the unemployed?

Social Impact and Community Budgets: Designing a SIB for vulnerable young people in Essex

Roger Bullen

Head of Partnership

Essex County Council

Keith Starling, Chief Financial Officer,

Big Society Capital

The Essex SIB:

Target: Young people on the edge of care or custody Intensive evidence based intervention: 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

The Essex SIB:

Referral capacity: 380 families Performance target: 110 young people diverted from

care or custody Projected savings: £17.3m gross over the life of the

scheme Costs: Capped at £7m Mobilised: April 2013

The Essex SIB

Action for Children

Evolution Fund Services

Service Users

Outcomes Contract

CSSL

£3.1 million

Investors

ECC

Ongoing operating funds

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2 3

4Social Finance

Service Contracts

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2

3

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• Board of Directors

CSSL and ECC enter Outcomes Contract

Investors fund CSSL

Funds released to service providers according to Service Provider Agreement

ECC returns a % of savings from reduced cost of care placements

Why Essex took this approach:

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

Feasibility study:

Referrals: numbers, reasons, source Cohort: characteristics, age, gender, family circumstances In care numbers: entering care or custody, not entering

care or custody, Care journeys: destinations and outcomes, length of stay Interventions: what works, meets needs, where’s the

evidence Applicability: appropriateness of Social Impact Bond

Control group review:

Methodology: historical case review 650 cases from an appropriate referral window, at least 30 months in the past

Eligibility filters: age, case type, MST exclusionary criteria

Benchmark data: establishing performance pre-MST: The number entering care The number that didn’t enter care The aggregate care days spent Average length of stay in care

Primary Outcome Metric:

Primary outcome triggers payment:

Outcome: The reduction in aggregate care days spent as

compared to the control review figure, including custody episodes

Duration: To the maximum of the average length of stay as

observed and set by the control group review and feasibility study

Secondary Outcome Metrics:

Secondary outcomes measured but currently do not trigger payment:

Youth Offending: reduced levels of YOS referralEducation: improved attainment, increased attendance, stability of specialist placementsHealth and wellbeing: Strength and difficulties questionnaire (STQ) identifying improved sense of well-being

Key learning points: Affordable: cost benefit comparison, value of

risk transfer, performance incentives Attributable: intervention, to outcome, to

savings benefit Cashable: payment realised from

commissioning budget where saving is made Simple: understood by all stakeholders Tactical: targeted where impact will be greatest

and last longest Marketable: use development to shape and

grow market from commissioner perspective Replicable: future application supported by

model design

The Essex Experience – next steps

December 2011, Essex selected as a Community Budget pilot area. 

June 2012, Social Finance Ltd, a Social Investment Finance Intermediary (SIFI), engaged by the Whole Essex Community Budget Programme (WECB) to explore role social investment could play in securing external investment to fund the delivery of certain services and improve outcomes.

Opportunities to be identified as suitable for further investigation and being developed within WECB programme. Pipeline approach.

Dynamic purchasing system established to enable timely procurement of consultancy services and support the development of a niche supplier market.

Mainstreamed within procurement processes.

• Big Society Capital’s mission is to build a sustainable social investment market to help social sector organisations increase their impact on society

• We do this by being an investor in the market though social finance intermediaries, investing up to £600m over the next 4/5 years

• Also by being a market champion, to increase awareness and confidence in social investment

• Social impact bonds are a critical part of the social investment market and will no doubt grow in number as the market develops

• BSC has invested in the first SIB fund: the Bridges Social Impact Bond Fund

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Investor Perspective – Big Society Capital

Investor Perspective – Big Society Capital

• Big Society Capital invests to create social impact, to make a financial return and to build the social investment market

• The Essex SIB has strong social impact by keeping children out of care and custody, as well as improving parenting and rebuilding positive relationships

• This is the first SIB commissioned by a local authority and so will drive change in the finance of public services

• The track record and evidence base that is developed during the programme will be vital in the development of the market

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How is it going?

• Two teams are in place - North and South Essex - and are working with families

• Stakeholder management – Action for Children, Essex CC and MST – is receiving focus and is going well

• Systems for data analysis have been developed

• Cost budget being carefully managed

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• Questions and discussion

Contact:

roger.bullen@essex.gov.uk

kstarling@bigsocietycapital.com