News and Comment

Social Impact Bonds: UK and comparative perspectives – Part 2

Wednesday 27 May 2015


I was recently invited to Tokyo, Japan, to share learning from the UK experience of designing and implementing Social Impact Bonds (SIBs). The UK was the first country in the world to implement a SIB – the innovative model that levers private capital to fund services aimed at generating measurable social outcomes for defined target groups – and it continues to lead the world in this field. It is unsurprising, therefore, that there is a lot of interest internationally in the UK experience.

Knowledge gap

There has been a noticeable shift in interest. No longer are the questions ‘what is a SIB?’ or ‘why should we use a SIB?’ commonplace – we are now more likely to hear ‘how might we make a SIB work for us?’ Japanese academics, leaders from industry, local government, charitable foundations, and the voluntary and community sector are in the midst of designing the first Japanese SIB and are hungry to learn more from the UK. Enquiries ranged from ‘what are the operational issues we need to plan for and anticipate?’, ‘how might we overcome some of the likely challenges?’ to ‘are current SIB models directly transferable to Japan?’ This final question, according to feedback from Japanese colleagues, is where a real gap in the knowledge base exists. OPM, given its unique position in straddling the commissioner, provider, and evidence worlds; coupled with links with the social investment sector, is seen as well-placed to share learning around these issues.

Some lessons learned and shared

Here are a few of the many issues I discussed with my Japanese counterparts:

  1. Knowledge of SIBs is often partial

SIBs are evolving rapidly. It is notable that much of what I encounter both here in the UK and in Japan reflects an understanding of the ‘first wave’ of UK SIBs. For example, many commissioners tell me they are put off from considering SIBs because of the long lead-in time and high development costs. While the Essex SIB took 23 months to develop and at a cost of around £300,000; there are now SIBs that are much quicker to commission. The Birmingham SIB is a case in point. Similarly Evidence-Based Social Investments (EBSI) developed a ‘spot purchase’ model of SIBs designed to reduce transaction costs for commissioners.

  1. SIBs are not exercises in technical design and financial modelling

Significant amounts of time can be spent on getting the technicalities (such as the outcome data, comparator data, savings and repayment modelling)  ‘right’. However, planning for SIBs should always include sufficient resources for engaging not only the workforce that is likely to be involved in delivering or supporting the intervention, but also for engaging with stakeholders inhabiting the wider ‘ecosystem of services’ that the intervention is to be introduced into. Without this, implementation will almost always come up against barriers caused by inconsistent processes; lack of shared understanding etc.

  1. What do we mean by ‘evidence’?

SIBs and evidence go hand-in-hand. SIBs can favour ‘evidence-based interventions’ due to greater certainty around likely outcomes (and hence repayment). ‘Evidence’ overwhelmingly refers to outcomes and effect sizes. There are two obeservations here: First, could this focus upon ‘evidence-based interventions’ lead us to favour only the types of interventions that are backed by ‘evidence’ and/or those backed by certain types of evidence (e.g. from randomised controlled trials)? If so, can SIBs genuinely support innovation? Second, any intervention, even when proven to be effective, will only work well if implemented effectively in complex local contexts. Do we pay enough attention to what effective implementation looks like in different contexts?

  1. Who defines ‘social impact’?

As the ‘first wave’ of UK SIBs are commissioner-driven, the definition of ‘social impact’ has largely reflected their priorities (e.g. size of potential savings). This doesn’t always have to be so. In fact, such a limited interpretation of SIBs will stunt their development. Indeed, with the newer types of provider-driven SIBs, there are alternative ‘voices’ being heard with their own interpretation of what ‘social impact’ looks like.


SIBs will be not be suitable for all types of interventions and target groups. Through all the twists and turns, it is vital that stakeholders remain focused on the outcomes for people we are trying to support. SIBs are an innovation designed to help address some of society’s most intractable social problems, and should be considered as part of an arsenal of commissioning approaches. Equally within SIBs, we should continue innovating; pushing the idea further to explore the possibilities for achieving meaningful social outcomes for some of the most vulnerable groups in society.


You can view the slides from Chih Hoong’s presentation in Part 1 of this blog.

If you would like to find out more about OPM’s evaluations of the ‘Essex SIB’ and ‘Peninsula LIST’ projects, please contact Chih Hoong Sin, Director of Evaluation, Research and Engagement at or on 0207 239 7877.