A lot of effort but worth it : Commissioners' experiences of social impact bonds

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James Ronicle (Ecorys UK) and Neil Stanworth (ATQ Consultants) presented at the National Children's Commissioning and Training conference (NCCTC) on commissioners' experiences of social impact bonds (SIBs), drawing on our research and consultancy support in this area. We focused particularly on the experiences of commissioners of Children's Services.
Transcript
  • 1. “A lot of effort but worth it” Commissioners’ experiences of social impact bonds The National Commissioning and Contracting Training Conference Hayes Conference Centre, Derbyshire 9 June 2016 James Ronicle, Ecorys UK & Neil Stanworth, ATQ Consultants
  • 2. What is a Social Impact Bond? In simple terms, SIBs are a form of Payment by Results, where the upfront capital is provided by an external investor Provider has to source working capital to fund services until payments are made Payment for outcomes Commissioner Provider Specification of outcomes Services / interventions Diagram source: ATQ Consultants
  • 3. In simple terms, SIBs are a form of Payment by Results, where the upfront capital is provided by an external investor Commissioner Provider Specification of outcomes Services / interventions Social Investors Payment for outcomes Up-front capital to fund services What is a Social Impact Bond?
  • 4. SIB Development SIBs in the UK There are 32 SIBs in the UK in a range of policy areas Source: Cabinet Office
  • 5. SIB Development SIBs to support Children in/on the Edge of Care Many argue that there is a strong business case for a SIB for children in/on the edge of care • Essex CC (ECC) has higher than average no. of young people in care. Care costs £20k - £180k per year / per individual • Big Society Capital & Bridges Ventures provide £3.1m loan • Loan funds AfC to provide MST for 380 young people at risk of entering care over 8 years. They aim to divert 110 from care. • Payments made when child is diverted from care • ECC anticipate saving £17.3m, of which up to £7m will be paid in outcomes payments – net saving of £10.3m • Investors could receive up to 8 – 12% annual interest Essex SIB: Children at risk of going into care Source: Cabinet Office
  • 6. SIB Development SIBs to support Children in/on the Edge of Care Children in/on the edge of care is the most common issue addressed by locally commissioned SIBs Commissioner Outcome Provider Essex Avoidance of care Action for Children Manchester Migration from residential to foster care Action for Children Birmingham Migration from residential to foster care Core Assets Cardiff Migration from residential to foster care Core Assets Various Adoption placements It’s All About Me/Various Various Migration or avoidance of care EBSI/Various N. Somerset Reunification or avoidance of care TBC (In procurement)
  • 7. SIB Development Issues faced by commissioners Both our research and engagement suggests a number of challenges for commissioners of SIBs Understanding investors expectations Complexity Agreeing contracts to suit all parties Policy uncertainty The role of intermediaries Stakeholder engagement Unnecessary “mystique”
  • 8. SIB Development Issues faced by commissioners The market is finding ways to meet these challenges Spot purchase models (e.g. IAMM – EBSI) Tariff-based payments per outcome Simpler SIB structures (1 provider, 1 investor, no intermediary) Make it easier for commissioners to buy outcomes, including at small scale, but VFM may be compromised If set correctly, reward performance and avoid complex measurement Avoid complex governance and unnecessary management costs
  • 9. SIB Development Issues faced by commissioners Commissioners can more easily develop SIBs by focusing on what they do best – commissioning “ Commissioners should decide what outcomes they want to achieve, and set a fair price for the delivery of those outcomes. If they do that, the market will respond. ” Leading Social Investor and SIB Fund Manager
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