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

CCommissioners

£Scaled Investment

Fund

SService Providers

£Investment Fund

SService Provider

CCommissioner

Multiple Commissioners

£Investment Fund

CCommissioner

SService Provider

Interventions Delivery Partners

Dynamic Procurement

System

CCommissioner

SService Provider

£Investment Fund

PrivateCompaniesFundsCharities

Scaled Managed Fund

CCommissioners

£Scaled Investment

Fund

SService Providers

CCommissioner

SService Provider

£Impact Investors