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

2. SOCIAL INVESTOR MARKET GROWTH VOLUNTARY SECTOR DEVELOPMENT
About Social finance
Our mission is to identify sustainable and scalable funding models to tackle entrenched social problems
GOVERNMENT
INVESTORS
SOCIAL ORGANISATIONS
Social Issues
LONG TERM SOCIAL GAIN
SOCIAL INVESTOR MARKET GROWTH
VOLUNTARY SECTOR DEVELOPMENT
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:

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
A SIB is…
A SIB is not…
A way of tackling social problems that require a range of interventions
Up front funding for service delivery
Only going to achieve returns for investors if social impact is achieved
An attempt to make more non- governmental money available to the social sector
Payments for failure – if no social impact is achieved investors lose their money
Debt or grant funding for service providers
A new form of PFI – investor returns are contingent on achieving socially beneficial outcomes

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
Cost to Government
Savings retained by Govt.
Impact of SIB
Investor return
Cost of Interventions
Net Cost to Government
Status Quo
SIB
Cost Saving

7. Essex Social Impact Bond for Children On the Edge of Care
Took about 1.5 years to develop to sign contract– feasibility study, sign off, procurement
Signed contract last Nov
Start date of April but didn’t really get started until May, given recruitment delays
Social Finance is authorised and regulated by the Financial Conduct Authority FCA No:

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.
Multi-Systemic Therapy (MST)
Objective
Reduce anti-social behaviour and prevent out-of-home placement – care or custody
How it works
Combines parenting support with practical assistance and a therapeutic approach to rebuilding relationships between the young person, the family and the networks around them.
Delivered by a team of family therapists, each of whom work with around 10 families per year in the home or community, providing 24/7 support.
Eligibility Criteria
Adolescents aged 11-17, displaying anti-social or offending behaviour or other conduct disorders
At risk of an out-of-home placement
Evidence Base
Good evidence from the US for MST on crucial factors relevant to the edge of care population, e.g. improved parental supervision and management, reduction in child conduct problems.
10 years running in the UK, with initial indications of positive impact on care outcomes.1
Defined model build confidence with investors but are a starting point
Benefits of quality assurance and fidelity
Source:

9. Essex SIB Structure Essex SIB Investors Investors SIB Co
SIB Co and LAs enter Outcomes Contract 1 2
£££ 2
Investors fund SIB Co 1
SIB Co
Outcomes Contract
Funds released to service providers according to Service Provider Agreement 3
Board of Directors
Social Finance
Local Authorities 4
Ongoing operating funds 4
LAs return a % of savings from reduced cost of care placements
Service Contracts 3
Action for Children
Evolution Fund Services
Essex SIB Investors
Eight year programme, with service delivery for 5.5 years
£3.1m invested, growing to approx £5.1 throughout lifetime of project
Aim to keep 101 YP out of care (equivalent care days we will save)
AfC – two MST teams
Evolution Fund Services – used to sustain outcomes over the tracking period
Service Users
(380 young people)

10. MST Oversight Committee
Governance Structure
SIB DIRECTOR
(CONTRACT AND PERFORMANCE MANAGEMENT)
CSSL
(3 Investors, 1 MST Expert, 1 Social Finance Rep, AfC invited once per quarter)
MST Project Board
(Key ECC Strategic and Operational leads , including finance, procurement, Lead Member for Children, AfC Operations Director, Social Finance Director)
MST Operational Group
(Service leads from the range of services that interact with MST, 2 MST Supervisors, 1 MST expert from another team, AfC Operations Director)
MST Oversight Committee
(MST Services senior staff from clinical and research, MST UK lead, Social Finance Director)
MST Problem Solving
(MST UK Lead, MST Consultant, AfC Operations Director)
All data driven

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?
30 month tracking period
Difference between A & B C

12. SECONDARY OUTCOME METRIC THAT DO NOT TRIGGER Payment:
Youth Offending
Convictions
Types and severity of offences
Sentences
Education
Attendance
Attainment
Wellbeing
Strengths and Difficulties Questionnaire
Family Star

13. 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
Once a child aged goes into care, it is likely they will spend more than 80% of the rest of their childhood in care.
In Essex, when we conducted our feasibility work, there were 1,600 looked after children. This number had been growing by around 28% over the previous five years
In Essex as in many English local authorities, year olds remain the largest age group to be looked after, representing c.40% of all looked after children
Average costs of care range from £40k - £200k p.a. per child, depending on type of care placement
Adolescents tend to spend more time than the average child in residential care which is at the more expensive end of the spectrum

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
Identified fit within broader services landscape
Buy-in and strong relationships across the partnership
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