1. 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

2. 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

3. 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

4. The Essex SIB Action for Children Evolution Fund Services Service Users Outcomes Contract CSSL £3.1 million Investors ECC Ongoing operating funds 1 2 3 4 Social Finance Service Contracts 1 2 3 4 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

5. 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

6. 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

7. 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

8. 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

9. Secondary Outcome Metrics: Secondary outcomes measured but currently do not trigger payment:  Youth Offending: reduced levels of YOS referral  Education: improved attainment, increased attendance, stability of specialist placements  Health and wellbeing: Strength and difficulties questionnaire (STQ) identifying improved sense of well-being

10. 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

11. 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.

12. 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 12 Investor Perspective – Big Society Capital

13. 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 13

14. 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 14

15. Questions and discussion

16. Contact: roger.bullen@essex.gov.uk kstarling@bigsocietycapital.com