Supporting Life Chances through Social Impact Bonds Life Chances Fund Supporting Life Chances through Social Impact Bonds July 2017

Life Chances Fund Supporting People through Social Impact Bands A Social Impact Bond (SIB) – what is it? Apply to the Life Chances Fund (LCF) GOLab – supporting learning

What is a Social Impact Bond (SIB)? A SIB is a payment by results service delivery contract with start up investment Features: Social investment - social outcome & financial return Upfront costs covered by investment capital Financial risk is taken by investors Defers cost of service provision (commissioner only pays for outcomes achieved) A Social Impact Bond is a Payment by Results Service Delivery contract, with start up investment In other words, a commissioner (or a group of commissioners), is willing to pay for a number of outcomes for a group of service users. The commissioner goes through a procurement process, selects a provider (or providers) and pays for any outcomes achieved BUT Payment by Results contracts can be a challenge for providers, especially those who can’t afford to operate whilst waiting for outcomes to be achieved, or have risk-averse governance structures. This means that VCSE organisations can find it hard to apply for Payment by Results opportunities, yet are often well placed to understand and respond innovatively to the needs of service users, in particular those with multiple and complex needs. SIBs can provide the opportunity for a more open market Features of SIBs include: The up-front service delivery costs are covered by investment capital. This means that the financial risk is taken by investors SIBs delay the cost of service provision for commissioners – who only pay for those outcomes that are achieved It is likely that some additional resources will be needed to get the data right early on

What is a Social Impact Bond? Investor(s) Provider(s) Upfront Working Capital Outcomes Payments (triggered by results) Services Provided For Life Chances Fund we can only fund Local Government (not central Government) Commissioners Commissioners could include charities and foundations with the power to commission in their own right Target Population Commissioners Results of Social Outcomes Achieved

What is a Social Impact Bond (SIB)? Financial Risk taken by the investors means that Resources are freed up: Commissioner funds used to start up fee for service Provider funds used to start up payment by results A wider range of smaller local providers can provide But, is this better value for money for you, given: Data management, collection, analysis & verification costs Management and governance costs Investment arrangement fees and return on investment A Social Impact Bond is a Payment by Results Service Delivery contract, with start up investment In other words, a commissioner (or a group of commissioners), is willing to pay for a number of outcomes for a group of service users. The commissioner goes through a procurement process, selects a provider (or providers) and pays for any outcomes achieved BUT Payment by Results contracts can be a challenge for providers, especially those who can’t afford to operate whilst waiting for outcomes to be achieved, or have risk-averse governance structures. This means that VCSE organisations can find it hard to apply for Payment by Results opportunities, yet are often well placed to understand and respond innovatively to the needs of service users, in particular those with multiple and complex needs. SIBs can provide the opportunity for a more open market Features of SIBs include: The up-front service delivery costs are covered by investment capital. This means that the financial risk is taken by investors SIBs delay the cost of service provision for commissioners – who only pay for those outcomes that are achieved It is likely that some additional resources will be needed to get the data right early on

The value for money case for a social impact bond Commissioner Saving For Local Community Benefit £ Cost to Commis-sioner of fee for service or PbR Savings to Commis- sioner Savings to Commis- sioner including 20% LCF Top Up Impact of SIB Investor return & SIB costs Net Cost of Interventions Cost of more effective Interventions Net Cost to Commissioner Status Quo SIB Cost Saving Cost Saving with LCF

Life Chances Fund Supporting People through Social Impact Bands The life chances Fund Aim To help people in society who face the most significant barriers to leading happy and productive lives (by growing the market in locally commissioned SIBs): 34 SIBs launched and 25 procuring in 17/18 (Commissioning Better Outcomes) 85 SIB projects applied for first two LCF rounds. Round 3 by 15/9 covers Drugs and Alcohol; 2. Young people 3. Children’s Services 4. Early years 5. Older people 6. healthy Lifestyles Innovation Strand – e.g.: homelessness, victim support, flood protection Introduce our role as Fund Administrators

Life Chances Fund Expressions of Interest Third round open to 15 September Electronic application form online Email helpline to assist - lifechancesfund@biglotteryfund.org.uk LCF funding team speaks to each commissioner named Development Grant money of around £30K Full award application - end April 2018 Ministerial decisions - July 2018 Launch your Social Impact Bond by July 2019 The LCF support contract can provide help from DG to launch The date of the third round will be confirmed after purdah Applications will be made via the online portal on the life chances fund website (link provided later in presentation) We can provide support via our email helpline. It’s important to be aware that, as part of our assessment process, a member of our funding team will be in touch with each commissioner named in an application – please let commissioners know this so that they expect our call

LCF Call out requirements Typically 20% contribution from Life Chances Fund No more than 49.9% Life Chances Fund contribution Must be 50%+ outcome based Primarily Local Commissioners Early intervention in complex social issues VCSE and service user active involvement LCF final outcomes payments Autumn 2025 LCF closes 2026 Learning is evaluated and shared to scale SIB benefits to others Scale – outcomes

Thinking of Applying? First Steps… Research Social Impact Bonds & intervention ideas & talk to: others who applied to Life Chances Fund previously commissioners willing to pay for outcomes service providers experienced in the service area service users and the local community supporting them Investors early to give you advice on whether the SIB is attractive to investors/test fit with investment fund aims your peers in this room now and after this event Do a skills audit: what Technical Support do you need to buy in Read the LCF guidance and look at the LCF EoI online Gather and share learning – subscribe to GOLab newsletter and look at the Big Society Capital Good finance

Established in 2016 as new centre of academic excellence for innovative government commissioning Joint partnership between the University of Oxford & HM Government

Trusted knowledge base Vibrant hub of stakeholders Centre of academic excellence Support for commissioners

Research challenge The promise of OBC… …that it can deliver a range of benefits including: improved cost effectiveness, innovation, accountability, systems-level planning, and responsiveness, with risk transferred to the private sector (NAO, 2015; Brown, 2013). At the same time, evidence supporting the effectiveness of schemes operating under OBC is alarmingly limited (Fraser et al., 2016). Public service commissioning and performance management systems have become increasingly focused on outcomes. We understand OBC as encompassing a range of approaches including PbR and SIBs.

How we work with commissioners Individual engagement prior to application for development funding Thematic workshops and masterclasses for commissioners Weekly telephone or online surgeries, every Tuesday, bookable online Publication of technical guidance and toolkits around the development and implementation of outcome based commissioning Curating and publishing the best sources of academic and practitioner literature

Life Chances Fund Supporting People through Social Impact Bands Annex For more information about Life Chances Fund visit www.gov.uk/government/publications/life-chances-fund For information/resources around SIBs visit: data.gov.uk/sib_knowledge_box/home For any other questions – Email: lifechancesfund@biglotteryfund.org.uk Introduce our role as Fund Administrators

Get in touch http://golab.bsg.ox.ac.uk @ukgolab linkedin.com/in/go-lab-395513140/ golab@bsg.ox.ac.uk http://golab.bsg.ox.ac.uk Get in touch

Case Study – Ways to Wellness SIB A social prescribing service Ways to Wellness SIB is for people in the west of Newcastle whose daily lives are affected by certain long-term health conditions. GPs refer patients to the service. Ways to Wellness provides a link worker to complement the medical support that people receive, to help them feel more confident to manage their long-term conditions and make positive lifestyle choices. Structure: The seven year project offers social prescribing for up to 3,500 patients at any one time in the west of Newcastle. In the first year of service, April 2015 to March 2016, 1,126 new patients were referred, 83% of which continue to use the service. Finance: Ways to Wellness has been awarded £2 million from the Big Lottery Fund Commissioning for Better Outcomes Programme, £1 million from the Cabinet Office Social Outcomes Unit and £1.63 million from Bridges Ventures Social Investment Fund. The service is expected to turnover £10 million over the duration of SIB.

Thank you! A world better led, better served, better governed Supporting innovative public sector commissioning to achieve better social outcomes through world-class academic research and practitioner engagement A world better led, better served, better governed