Manchester City Council - a Social Impact Bond Jock Rodger Strategic Lead Commissioner Children’s Services

Social Impact Bonds (SIBs) Social Impact Bonds are a form of outcomes based contract in which public sector commissioners commit to pay for significant improvement in social outcomes (e.g. reduction in offending rates or hospital admissions).

The challenge Government budgets are limited and it can be a challenge to secure funding to deliver preventative services while simultaneously funding acute services. Over time this creates a negative spending cycle and an ever growing need for government resources to be spent on expensive acute care. As commissioners we are concerned that the outcomes promised by preventative projects will not be achieved and therefore the savings will not materialise. Many preventative programmes have suffered from variable implementation in the past.

The Challenge (2) All or some risk transferred to investors, rather than providers, if providers not sufficiently well-capitalised A Social Impact Bond transfers implementation risks away from the public sector commissioner to socially motivated investors. Therefore investors bring their own expertise and focus resource on performance management and capacity building to ensure positive outcomes are achieved. This can drive improvements to preventative services and ensure that commissioners only pay out when outcomes are achieved .

Criteria for a SIB Major social challenge; a priority for public sector and investors Promising interventions that require upfront investment Robust outcome metric Clearly defined target group Cashable savings to be made which can be used to repay up-front investment plus a return Investors better able to deliver higher performing service and manage risk than in traditional service delivery

Social Impact Bonds EXAMPLES Peterborough Prison GLA Rough Sleeping MOJ Innovation Fund Essex Children on the Edge of Care Families facing multiple problems Drug Rehabilitation Community Health

Context in Manchester Strategic vision to reduce dependency Innovation – One of the first local authorities to adopt the SIB model Importance of the client group Significant challenge around looked after children and young people

Number of Looked After Children Manchester currently has 1,311 children and young people in its care (as at March 2012).

Age of entry into Care System Evidence shows that there is a sharp increase in the number of young people entering care from the age of 14 onwards.

Placement Type Typically Manchester has 69% of LAC placed in foster care. The percentage of LAC in residential homes in Manchester is 11%. This is compared with 2% of LAC nationally. Manchester is responsible for 14% of the national number of children in residential care. Improved outcomes for children in foster care in comparison to residential homes.

MTFC-A Multi-dimensional Treatment Foster Care - Adolescents

How MTFC works 12 Foster Carer & Young Person Programme Supervisor Foster Carer Recruiter Programme Manager PDR Admin Skills Coach Individual Therapist Birth Family Therapist Education Worker 12

Who is involved 1 Children’s Services commissioners Children’s Social Care Managers Research & Intelligence Corporate & Children’s Finance Procurement Legal Services Risk Health

Who is involved 2 Children’s LAC Education A broker (Social Finance) MTFC (National Team) A provider (tbc) An investor (tbc) Young People and families Social workers

Finance and Performance Outcomes framework will track progress, leading to payments: Young people’s well being MTFC ‘graduation’ rate The evaluation will include the wider objectives of the programme Social Investment in Manchester

Framework and Metrics The Evaluation Framework will be agreed with both the investors and providers Examples of metrics: Number of weeks out of residential care Progress against the Young Person’s plan Attendance and attainment at school Health measures Foster carer’s satisfaction with the support they receive Most of the metrics are absolute and will directly relate to the cohort itself Soft outcomes

Continued The return is generated through the decommissioning of residential provision and is split between MCC and investor return We have considered the ability of MCC to “cash” such savings and are confident that we will be able to directly convert the reduction in care costs to cash amounts that can be used to fund the programme/repay investors.

Financial Model Summary Total cost of delivery over 5 years is £5.6m funded by; Social Investors Recycled Savings Savings accrue over 8 years to £10.9m Timescale dictated by gradual ramp up of delivery Benefits accrue on average for 3.6 years per graduate Cohort demographics