OPPORTUNITIES FOR SOCIAL IMPACT BONDS:
PROGRESS IN WORCESTERSHIRE
Ben Jupp
ben.jupp@socialfinance.org.uk
Lauren Fulton
lauren.fulton@socialfinance.org.uk
Social Finance is authorised and regulated by the Financial Conduct Authority FCA No: 497568
2
INTRODUCTION AND TERMINOLOGY
1) Social Finance
an independent not-for profit
organisation
social investment
2) social investment
money that is provided on the basis of social and
financial return
Social Impact Bonds
3) Social Impact Bonds
©Social Finance 2013
One way in which social
investment is deployed; a
social investment “product”
other forms of social
investment
3
KEY PRINCIPALS OF SOCIAL IMPACT BONDS
Social Impact Bonds are a response to systematic underinvestment in prevention across public
services.
• The Social Impact Bond is a means of investing in
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 Finance 2013
SOCIAL IMPACT
BONDS BRING NEW
FUNDING TO
COMPLEX SOCIAL
PROBLEMS AND
FOCUS ALL
STAKEHOLDERS ON
PREVENTION
UK COMMISSIONED SIBS
4
7
1215
2
5
1
14
11
13
8
10 3
9 6
1
Ministry of Justice – Peterborough
Reducing reoffending
2
DWP – West Midlands
Disadvantaged 14-24 year-olds
3
DWP – Stratford and surrounds
Disadvantaged 14-24 year-olds
4
DWP – Perthshire and Kinross
Disadvantaged 14-24 year-olds
5
DWP – Nottingham City
Disadvantaged 14-24 year-olds
6
DWP – Shoreditch, London
Disadvantaged 14-24 year-olds
7
DWP – Greater Merseyside
Disadvantaged 14-24 year-olds
8
Essex County Council – Essex
Children at risk of going into care
9
Greater London Authority – London
Rough sleepers
10
DWP – West London boroughs
Disadvantaged 14-15 year-olds
11
DWP – Cardiff and Newport
Disadvantaged 14-15 year-olds
12
DWP – Greater Manchester
Disadvantaged 14-15 year-olds
13
DWP – Thames Valley
Disadvantaged 14-15 year-olds
CVAA – England-wide
Adoption
Manchester City Council
Children in Care
In development
14
15
©Social Finance 2013
Source: emmatomkinson.com
4
5
LONELINESS AS AN AREA OF UNDERINVESTMENT
Loneliness has an equivalent impact on mortality as smoking 15 cigarettes a day.
Preventing loneliness and isolation should enable older people to stay active and reduce periods of
ill health and disability.
In developing the Social Impact Bond we have reviewed a number of impacts in order to assess the
likely benefits in reducing loneliness.
Potential value to local and
national stakeholders
Mechanism which
directly impacts
service usage.
GP visits, A&E visits,
hospital admissions
Lack of support
structures
Increased likelihood
of entry to care
Dementia
Loneliness*
Short term health
care costs of
treatment
Depression
Diabetes
Increased risk of
developing LTCs that
lead to additional
expenditure
Stroke
Medium term health
and social care costs
of treatment
Loss of quality
adjusted life years
Less active lifestyles
CHD
* For the purposes of modeling, Social Finance has focused on the
impact of loneliness, where the research base is stronger than
isolation per se. Clearly there is a relationship between the two.
©Social Finance 2013
Increased disability
Attendance
Allowance claims
Value
included in
financial
model
6
A SOCIAL IMPACT BOND TO REDUCE LONELINESS AMONGST
OLDER PEOPLE
A Social Impact Bond would be an appropriate tool to develop a targeted service to reduce loneliness.
•
Loneliness can be measured robustly using the Revised UCLA short form survey of loneliness.
•
There is a mixed evidence base for interventions that reduce loneliness. The oversight and rigour
brought by social investors can support the development of an effective intervention.
•
Payments made on the basis of average reductions in loneliness scores align interests of
commissioners and providers.
Outline approach
INVESTORS
Funding
Payments on
basis of
outcomes
Lead delivery organisation
CBT for
Peer support
Befriending Group Activity
groups
and Exercise most isolated
Reduced loneliness
©Social Finance 2013
Commissioners
- CCGs, Local
authorities, central
government
Reduction in
loneliness
7
THERE HAS BEEN SIGNIFICANT NATIONAL AND LOCAL
INTEREST IN THE BUILDING CONNECTION SIB
There has been significant national and local interest in the Building Connections Social Impact
Bond.
•
Department of Health funded initial cost/benefit modelling work through its Social Enterprise
Investment Fund.
•
Cabinet Office has committed to contributing up to £1 million of outcomes funding for
reductions in loneliness through the Social Outcomes Fund.
•
Development partners Nesta and the Calouste Gulbenkian Foundation have committed grant
funding for testing areas of innovation within service delivery and for an independent evaluation
of the service impact on health outcomes.
•
Investors, including charitable trusts and foundations, have been introduced to the Social
Impact Bond design and are ready to conduct due diligence once procurement begins.
•
Interested commissioners, including other Local Authorities and Clinical Commissioning
Groups, have initiated conversations about replicating the model.
©Social Finance 2013
8
PROGRESS IN WORCESTERSHIRE
• Information is available on WCC Portal
• PQQ will be published once timeline confirmed
• Marketplace engagement events will take place
• Maximum of 5 bidders invited to tender
• Bids will demonstrate ability to provide investment and delivery
• Outcome-based contract
• Prime contractor, consortia, single provider model
• Aim is for winning bid to be awarded by Oct/Nov
• Project to commence by the end of the year
• Outcomes evident and paid approx. 6/18 months later
©Social Finance 2013