I recently changed posts at the LGA and now, as part of my new role in the Finance and Policy team, will be working with the not-for-profit organisation Social Finance on Social Impact Bonds (SIBs). Social Finance and the LGA have been contracted by the Big Lottery Fund to provide support for commissioners and the wider community to develop SIBs as part of their Commissioning Better Outcomes fund.
Local government has always been a leader in finding new and better ways of delivering services to improve lives and save public money. Our members are keen to look at how Social Impact Bonds can be used to tackle issues of concern to residents, such as truancy, criminal reoffending and antisocial behaviour.
Earlier this month, as part of the LGA-Social Finance joint support programme, I attended the first in a series of joint workshops on SIBs. These provide an opportunity for councils (and other organisations) to learn about SIBs and how they can be used in a local authority setting.
For me, this was a fantastic first opportunity to hear directly from councils about what issues they hoped a Social Impact Bond could help them tackle.
Below is a summary of the key points from the event. I also thought it would be useful to list some links to key resources and provide some contact details. Above, sign up to one of remaining set of workshops
Here is a brief summary of the key points:
What is a Social Impact Bond?
A Social Impact Bond or “SIB” is a contract with a public sector commissioner, (like a local authority), in which it commits to pay for improved social outcomes.
On the basis of this contract, investment is raised from socially motivated investors.
This investment is used to pay for a range of interventions to improve social outcomes.
If social outcomes improve to an agreed level or measurement, investors will receive payments from the commissioner.
These payments repay the initial investment plus an agreed financial return.
The financial return is dependent on the degree to which outcomes improve. If no social impact is achieved, investors lose their money.
Case Study - the Essex County Council Social Impact Bond
The Essex ‘children on the edge of care’ SIB was the first local government SIB in the UK. Social Finance raised £3 million from social investors to fund work with adolescents on the edge of care in Essex.
It focuses on 11-16 year-olds at the edge of care or custody in Essex, with the objective of providing support in order that the young people can safely remain at home with their families, with the aim of substantial improvements in their lives.
Funders of the programme costs make a financial return on their investment if it is successful, with the size of return dependent on the level of success, but could lose their entire investment if it isn’t.
Find out more about the Essex SIB here
Support for Commissioners
There is a range of support and funding for potential commissioners to access:
The Cabinet Office launched its ‘Social Outcomes Fund’ of £20m last November as a means of dealing with the difficulty of aggregating benefits and savings which accrue across multiple public sector spending silos.
Over the summer, the Big Lottery Fund launched its ‘Commissioning Better Outcomes’ fund of £40m with the aim of growing the market in social impact bonds and other outcomes based investment instruments. Its aim is for organisations, and particularly VCSE organisations, to access new forms of financing to be able to reach more people (particularly those most in need), so they can lead fulfilling lives, in enriching places, as part of successful communities in England.
Applicants, who will use a single application and entry point to access both funds, will be public service commissioners (such as local authorities). They will be able to use the funding to top up payments to a delivery partner or via a social investment intermediary for providing certain services and delivering pre-agreed outcomes.
As well as our workshop offer, Social Finance and LGA are also offering a range of support, including technical guides, online tools, webinars, podcasts, workshops and one-to-one surgeries.
These tools will hopefully play a big part in supporting a commissioner’s proposal that could then go on to access technical development grants from Commissioning Better Outcomes, leading to a possible contribution to outcomes payments from either or both of the outcomes funds.
On the day, I was glad to see the wide spectrum of councils and other organisations represented. These included districts, counties and London boroughs as well as think tanks, and health and private sector organisations.
At the event, attendees were asked to write down possible social issue areas that they would like to explore using a SIB for, and group them together. There were a variety of issues that candidates thought had the potential to be tackled. One, for instance, sought to explore alternatives to residential care for adults with learning difficulties. Another wanted to focus on early years 0-5s NEET prevention in troubled families.
The next step was for attendees to choose a social issue to focus on and plan a hypothetical SIB development process in order to fill in an initial expression of interest form. This involved identifying a target population, the intervention to be used, and a possible outcome metric that used to measure success. In tables, attendees then role-played developing a SIB within a local authority, through negotiation with the key stakeholders.
Feedback at the end was positive, with attendees appreciating the focus on real life examples, including hearing about the case study from Essex, and having the opportunity to talk with other authorities about their ideas.
I would encourage all those with an interest in Social Impact Bonds, whatever stage you are at, to attend one of these free events. We are also offering surgery sessions at the end of each workshop. Each 1:1 session will last 15 minutes and will be an opportunity for you to receive expert advice on your specific query.
I look forward to seeing you soon!
Full guidance, Q&A and Expression of Interest application form - Big Lottery Fund and Cabinet Office
Social Finance website
Template PbR contract and guidance, and SIB Knowledge Box - Cabinet Office
Tom Symons, Associate: email@example.com
Local Government Association
Philip Mind, Senior Advisor: Philip.Mind@local.gov.uk
Daniel Shamplin-Hall, Advisor: Daniel.Shamplin-Hall@local.gov.uk