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: 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
The Essex SIB: Action for Children Evolution Fund Services Service Users Outcomes Contract CSSL £3.1 million Investors ECC Ongoing operating funds Social Finance Service Contracts 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
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
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
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
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: available SSDA903 returns, LAIT, Cabinet Office Unit Cost Data Supports: Standardisation: of model and metrics, support specification, price transparency, timely implementation, ease of procurement Scale: investors distribute funds across multiple schemes with same risk and return profiles
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