Wednesday, October 21, 2015
Whither Social Impact Bonds?
When the Peterborough Social Impact Bond (SIB) was launched in 2010, SIBs were heralded as the future of funding social change. This £5million SIB was designed to reduce reoffending among short-sentence male prisoners through an innovative model of levering private investment in social outcomes. In April 2014, however, the third and final cohort of the SIB was cancelled; leading to much hand-wringing by concerned onlookers. This ‘shut down risk’ has caused a number of interested parties to express concern that the development of SIBs may be stunted by Government ‘meddling’. Others were more despondent and claimed that the SIB “dream” may be over.
However, at around the same time as the cancellation of the final Peterborough SIB cohort, the Cabinet Office launched a £30million package to back SIBs to help disadvantaged young people into education, work or training. The number of SIBs in the UK continues to grow, and currently totals 31; more than the rest of the world combined. My trip to Japan earlier this year and a second visit from the Japanese delegation in September to learn from the UK SIB experience and to explore the future of SIBs indicates continued international interest. A variant of the Impact Bond model: the Development Impact Bond, has just been launched in Rajasthan, India; aimed at improving the retention and attainment of girls in schools.
A recent expert roundtable convened by the UK Cabinet Office and HM Treasury focusing on the future of SIBs again signals the current Conservative Government’s intention to ‘scale up’ SIBs, signaled in their Manifesto published before the Election. SIBs can therefore be thought of as still being in a nascent stage of development. It is a concept that is still being pushed in ways that may not have been envisaged when the Peterborough SIB was first designed.
I realised, from my involvement in the Commissioning Academy over the past 15 months or so, that while awareness of SIBs has risen over time; most are still woefully unaware of how SIBs have been evolving and the implications that may arise. Indeed, most people’s understanding of SIBs is based on quite outdated information.
Proliferation and transformation
Although they got off to a slow start, SIBs have now entered a phase marked by proliferation. This is not merely a numbers game. Moving beyond criminal justice (as in the case of Peterborough), SIBs have now spread across an ever-growing number of social issues including children and family support, employment, homelessness, health, and more. There are brave and creative ones emerging, tackling issues such as social isolation, using social prescribing to support holistic wellbeing, and more.
While many SIBs are used to back proven evidence-based interventions, there are others motivated by a commitment to try new ways of doing things by backing relatively ‘untested’ interventions. There are also examples of SIBs being used to back proven interventions in ways that varied from the evidence base behind those interventions; for example by applying an intervention on a different target group, in a different setting, etc. The appetite for innovation seems alive and well.
Different SIB structures have also emerged. The Bank of America Merrill Lynch and Bridges Ventures have typologised them as ‘direct’, ‘intermediated’, and ‘managed’ SIBs. These different and ever-evolving structures are important in supporting different commissioner, provider, and investor motivations; for example through accommodating different appetites for risk. This could bring a wider variety of actors into the market, in turn opening up further possibilities.
A further development that has attracted significant attention has been a response to the high development costs of the “first wave” of UK SIBs which has been perceived by many to be a major stumbling block. For example, the Essex SIB took 23 months to develop and cost Essex County Council around £300,000. Innovative responses from the market have led to new variants of SIBs that are provider-led, or have been packaged by intermediaries, in ways that reduced transaction costs for commissioners by creating models for easy ‘spot purchasing’.
It is endlessly fascinating to observe how different groups, different sectors and different countries have taken the idea of a SIB and have run with it; molding this malleable idea into seemingly limitless incarnations. There is no single model of SIB that is appropriate in every instance. Indeed, SIBs themselves may not be suitable in some situations. Instead, it encourages us to continue innovating and pushing the idea to its limits. I would simply like to end with a reminder never to forget the ‘social impact’ part of Social Impact Bonds. At their best, SIBs contain a wealth of possibilities for generating meaningful social impact for some of the most vulnerable people in our societies. Let us rise to that challenge.
Dr Chih Hoong Sin, OPM Director for Business Development
Wednesday, October 14, 2015
Evaluation of the Multi-Systemic Therapy Social Impact Bond
Evaluation of the Essex Multi-Systemic Therapy Social Impact Bond
Essex County Council (ECC) Family Operations Service currently provides access to Multi-Systemic Therapy (MST) to young people who meet the referral criteria. This service is aimed at supporting young people and their families where there is a risk of a young person entering care (which also includes young people remanded into custody), and has the intention of keeping the young person within the family home whenever it is safe to do so. This service is being funded via a Social Impact Bond (SIB) and is being delivered by an external provider.
In 2013 OPM were commissioned to deliver a three-year independent evaluation of the MST SIB, using funding from Central Government.
The evaluation will generate:
- A replicable methodology for capturing any value added by the SIB
- Recommendations for improving the delivery of MST through a SIB in Essex
- Recommendations for improved future working of SIBs.
The evaluation involves capturing both qualitative and quantitative data. This is the first of two interim reports and presents the findings from the first eighteen months of evaluation activities. The evaluation will run until March 2016, culminating in a final summative report.
Monday, September 28, 2015
Can a different kind of council website help build new collaborations with communities?
For years, most councils have been running consultations with their communities to find out what they think about services, what they want to see done differently, and increasingly what they would prioritise (and depriotise) in order to inform spending plans.
This is largely an exercise in research – in understanding what people think about their services, what they’d change, and when tough choices are on the table, what they’d protect and what they’d cut.
A lot of my work in the last couple of years has been about promoting another aspect of community engagement (and this is definitely engagement, rather than consultation). This work emphasises the value of co-design, whereby service users and citizens more widely help to shape what services look like. More than that, it also seeks to explore how outcomes can be achieved in new ways – perhaps involving a community group in delivering a service, or supporting a community to take on a project or an asset itself.
Increasingly we’re finding councils keen to open up these new sorts of conversations – with town and parish councils, with community groups or just with driven individuals who have a big idea. But councils can struggle with what this means in practice. There’s the obvious challenge of making time and resource available to nurture these local ideas when ever-shrinking budgets loom. But aside from that, there’s another simple, practical challenge of what an ‘ongoing conversation’ or ‘ongoing engagement’ really looks like, and how to enable it in a way that’s cost effective and which isn’t repetitive.
Part of the answer – though only part – could be a website like the one Devon County Council has recently launched:
It was something they already had in the pipeline when we worked with them earlier in the year through the Cabinet Office’s Delivering Differently programme. As part of that programme, we helped them produce content for the website, reflecting on some of the local projects we had been involved in and sharing some of the tools we had used.
So who is this website aimed at?
The intention is that a Devon-based group or an individual with an idea for their area – or maybe just half an idea – can use this website to get started. Perhaps you feel there’s a challenge that needs addressing and want to get people together to work on a solution – here you’ll find tools for running engagement events. Perhaps you have plans for how to use a local building in a different way – here you can read guidance about taking on a building as a community asset. Perhaps you’re starting with a project but no venue and want to find out what buildings could be suitable – the website provides a map of council buildings, how they’re used and even how big they are. And wherever you’re starting from and whatever your project, there will be some sort of guidance, tools or local case study that’s relevant. That’s important because when people find this website, they won’t all be starting from the same point.
Isn’t all this material available already, somewhere else?
Some of it, certainly. Lots of councils already provide (very dry) lists of consultations that are currently live, and somewhere else they may provide local data profiles of their communities. National organisations like Locality and the Plunkett Foundation, meanwhile, provide some great advice, guidance and case studies on topics like supporting a village library or saving a pub. The real value of Devon’s community website is that it brings all these things together into one place, presented through a very local lens, and makes a very public, positive invitation to residents and local groups to start a journey of involvement.
And that positivity, coupled with clear, practical routes to shaping a proposal and submitting it to the council – is important. Sure, there’s also a cuts narrative behind all this, and the cabinet member’s introductory message doesn’t shy away from that. But you can’t easily frighten or depress people into getting active – much better to inspire and energise, which is what the website’s local case studies do, from the youth club in Ottery to the book shop in Crediton.
Positive and practical routes to involvement
I personally would have gone with a diffent tag line for the website – ‘helping communities to help themselves’ has something of the Victorian moraliser about it. But overall this website positions itself well as a different kind of local authority resource, combining warm words on co-production with practical routes to involvement – local data to inform your case, tools to engage your neighbours, buildings you could enquire about and guidance for making a proposal. I suppose it feels like a website which flings open a door on the sort of collaboration implied by the new Community Rights, rather than peering suspiciously from behind a curtain at County Hall.
What sort of response people will get from Devon County Council if they take up the invitations made here, I don’t know. Certainly a website on its own won’t mean much if in practice, it’s not followed up by a willingness or ability to support those ideas and proposals that emerge. But as a repository of useful information, an exercise in openness and a statement of a council’s intent to be collaborative and creative about its assets and services, it’s a good start. Maybe every council should set up a site like this as one strand of that ‘ongoing engagement’ we all keep talking about.
Monday, September 21, 2015
OPM continues social impact bonds knowledge sharing relationship with Japanese universities
Earlier this month we were delighted to welcome an SIB research delegation led by Meiji University back to OPM.
The visit is the latest development in the partnership supporting a 5 year empirical study funded by the Japanese Government into how social impact investments, especially SIBs, affect governments, social service providers, service users, and the standard of social services in the UK – further evidence of the interest internationally in the progression of the UK social impact bonds market since the world’s first was implemented in Peterborough Prison 5 years ago.
The delegation first visited OPM last November to hear about our experiences evaluating the Essex County Council SIB and ‘Peninsula LIST’ project, and continuing the relationship in April OPM’s Director of Business Development Dr Chih Hoong Sin spoke at the 2015 Social Investing and Corporate Social Responsibility (CSR) Forum, held at Meiji University in Tokyo – presenting his observations of the nature of the ‘first wave’ of UK SIBs and the lessons to be learned from the world’s most developed market.
OPM’s expertise, it is hoped, will contribute to the launch of the 1st Japanese social impact bond.
This latest meeting was particularly timely. At the time of writing the UK still accounts for the largest number of SIBs globally (31), having been the first to pioneer the pay-for-performance vehicle that leverages private funding to finance public services five years ago. In addition, Social Finance had recently announced details of the first UK social impact bonds to perform above expectations and deliver outcomes sufficient to return investor capital earlier than expected.
Yet the international backdrop is more mixed.
The Riker’s Island SIB, which aimed to reduce recidivism among 16 to 18-year-olds who entered New York City’s Rikers prison by at least 10% had been terminated due to failing to achieve the agreed targets, while a new report from the Brookings Institute (Chih Hoong Sin is referenced as a study participant on page 52 and OPM’s evaluation of the Essex Family Therapy SIB features on page 84) this summer called for increased transparency and knowledge sharing on the potential and limitations of impact bonds to move this agenda – how to better ensure the achievement of outcomes for vulnerable populations – forward.
In this context we were in a position to update our Japanese colleagues on the progress of our evaluation of the ‘Essex SIB’ – the first in the world to be commissioned by a local authority – and the ‘Peninsula LIST Project’, that aimed to use an SIB as vehicle to commission public services across 4 local authorities in the South West of England.
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 Business Development at CSin@opm.co.uk or on 0207 239 7877.
Monday, July 27, 2015
Systems Leadership in Complex Cities
How OPM recently worked with Vietnamese civil servants to explore the role of systems leadership in complex city challenges.
With a population centre of more than 10 million people, London is the UK’s one and only megacity. Whilst the city plays a dominant global role, there is no doubting that its sheer volume of people, communities and businesses creates unique social, economic and environmental challenges.
Much of OPM’s change and transformation work seeks to address complex and uncertain situations like these through systems leadership thinking.
This sort of leadership has been defined as “the collaborative leadership of a network of people in different places and at different levels of the system creating a shared endeavour and cooperating to make a significant change.”
Systems leadership will therefore be crucial in meeting the challenges of megacities, and so we were delighted to host a delegation of planning and investment civil servants from Vietnam earlier this month to explore the role of systems leadership in the context of complex city challenges.
The event, organised in conjunction with the University of Southampton’s business school, explored systems leadership through a case study on 9 Elms. 9 Elms is a key regeneration initiative in the centre of London that will create among other things, 18,000 new homes; 25,000 new jobs; 2 new tube stations and a new linear park.
Whilst the regeneration efforts will contribute to local economic growth, there are already concerns around a lack of affordable housing, the long term viability of local independent businesses and the balance between commercial and civic space.
After learning more about systems leadership, the delegates were tasked with identifying the potential problems that may arise as the project progresses and the systems leadership skills and behaviours that would be required to overcome these problems.
The feedback from each group was remarkably similar. The project’s success will require the cultivating of positive and honest relationships between partners across the public and private sector, while the tension between profitability and creating a pleasant living environment will have to be managed sensitively throughout the process. Those involved in leading the regeneration efforts will also need to be brave enough to confront difficult conversations when interests conflict or risk stalling the progress of the project.
For more information on OPM’s experiences around systems leadership, you can download our recent paper, “Systems Leadership: A view from the bridge.”
Wednesday, July 1, 2015
Our Place Guide to Co-design
This short guide aims to provide an introduction to co-design in public services: the reasons to do it, the principles that underpin it and some practical approaches for making it work. It focuses on co-design as opposed to co-production, although there are clear overlaps and links between the two, and much that is said here is relevant to both.
Above all, it seeks to make the case that co-design implies something very different to ‘consultation’ as its often understood, and it urges councils and other public bodies to think carefully about the ways they set about planning and undertaking engagement activity with service users.
Monday, June 15, 2015
OPM features heavily in influential new Systems Leadership paper
The Leadership Centre‘s role is to create the space for senior managers and politicians from across the public sector to think about the ambitions they have for their communities and how they can achieve them in order to fundamentally transform their localities for the better. It is made up of leadership experts with experience in politics, central and local government and the wider public and private sectors.
Its most recent publication, ‘The Art of Change Making’, is a collection of theories, approaches, tools and techniques for understanding the complex interactions between people and organisations and how to intervene to create meaningful change. These are used by current practitioners in developing systems leadership.
OPM features heavily in the paper. The document can be downloaded by clicking on the image below:
Quotes from OPM’s Principal in Local Services Sue Goss can be found on pages 199, 205-206 and 130, OPM Associate Paul Tarplett on pages 4, 117, 120, 186, 209, 211-212 and 217, Matt Gott on pages 2, 50, 71 and Liz Goold on pages 57, 93, 147 and 245.
Sue Goss has also published a short paper on the subject, Systems Leadership: A View from the Bridge, a personal account of what has been learned from working with leaders collaborating across organisations to achieve difficult outcomes with shrinking resources since 2010.
Monday, June 8, 2015
We all want to grow community capacity – but are we trying to do it in the wrong place?
How do we grow more engaged communities? How do we utilise the ideas, the skills and energy in our towns, villages and neighbourhoods in ways that make people’s lives better – and which enable our limited public finances to stretch that bit further? How do we open up different sorts of conversations and relationships between citizens and agencies, and how do we sustain those? How can councils help to surface and support the capacity around us?
These are questions that all local authorities have been asking – to a greater or lesser extent – at least since the Big Society debates appeared five years ago, and in some cases long before. They remain important questions, and ones which can be found at the heart of much that we are asked to do by councils and their partners. Discussing the answers – potential and partial as they are – involves thinking and talking about all the things you’d expect: the idea of councils as enablers and facilitators, not just service deliverers; the importance of coproduction and co-design with citizens; the value of taking an asset-based approach in tackling challenges and engaging communities, rather than focusing on gaps and problems, and so on.
These are all familiar and important features in the landscape of this agenda, and they are ideas that continue to interest and excite people across public services and community organisations, which is positive. But it’s a landscape that is busy and crowded, and I’ve been trying to think of some simple ways to visualise the challenge at the centre of it all – the thing that’s stopping us from making major leaps forward, and which keeps a lot of stuff broadly the same.
Bear with me, this is a work in progress – and I’m writing a blog post, not a treatise.
So I’m starting with this single, green circle – the collaborative sphere. This represents a community where neighbours share things – books, garden tools, skills, ideas and time. If enough people think that something needs doing, they get together and do it because they agree its worthwhile, and because they know and trust each other. This is a community characterised by cooperation, relationships, trust, sharing, and reciprocation.
In the next image, we see the green circle framed by something else – the accountable, governed sphere. Here, there is a recognition that whilst life in the green circle can be wonderful, things can go wrong. Decisions can be made in hap-hazard ways, or based on the whims of a few noisy individuals rather than the evidence of what would work best for the many. Moreover, people new to the community or those who are weakest may not get heard. The yellow, outer-circle therefore exists to keep things fair and safe and transparent. This is the world of process and procedure and accountability – things which can be very important not only in helping to reach sound decisions but proving that they’re sound.
Against this familiar backdrop, councils and their partners are increasingly interested in how they can grow the capacity of their communities – to build resilience, to enable and empower, to involve citizens in shaping new responses to local challenges and new ways to achieve better local outcomes.
But too often, I would argue, they are trying to do that from within the governed sphere – the world of consultation processes and public meetings, of steering groups and strategies. These things can all be important, but they’re not fertile ground for growing a more active, positive, networked community. Getting people to care, to take part, to start sharing ideas and taking action is much more effectively done in that green circle of collaboration.
And so we end up with the third image – a world in which we all ‘get’ how valuable community participation can be, but which our public bodies try to nurture in the wrong place. We close down what could be creative, positive conversations with tightly formulated questions about how a service works or doesn’t work; we deter the mass of people from getting involved whilst satisfying a dedicated but often tiny core of consultation-responders and meeting-attenders; we make everything about generating an action plan or a strategy before we’ve invited people to do the most important thing of just coming together and talking and sharing and having a go at something.
Think about the most inspiring and successful examples of community involvement – from the local one-off projects to save a pub or reopen a shop through to movements like Incredible Edible. A lot of the activity that powers these projects takes place in that collaborative sphere, where people are excited and impassioned, where they build networks with their neighbours in order to make things happen. At some stage some activity has to move into the outer-sphere for all the reasons we’ve talked about – to make sure what they’re doing is safe enough, and fair enough, and a good use of public resources if and when those are required. But for the most part these projects do not live or grow in that outer-sphere – and had they moved over too soon, they would perhaps have run out of steam and reached a premature end.
And yet, too many of us in too many organisations continue to try building public participation in that outer-sphere. It’s what many officers, councillors and even chairs of community groups know best. It’s safe. It’s ordered. It’s efficiently directed at a specific topic or problem: ‘Tell us, community, what do you want us to do – option A, B, or C? Leave your comments in a box by the door.’ Or ‘Fill in our survey and tell us what matters to you so we can go away and work on it’. The outer circle may be safe and ordered, but it can also be a very passive space for citizens, a very dry and uncreative space, and a space which we hastily fill with the wrong questions and so only ever get partially useful answers.
This is not, I should emphasise, an ideological statement about the dangers of big government squashing a free and engaged society – because what we’re talking about here are some very genuine efforts by government, in its local form, to change its role by pushing power and activity into communities. The problem, I believe, is that these efforts either start in the wrong sort of space or are transplated into that wrong sort of space too soon, straight-jacketed and drained of all their colour and energy for the sake of making them look neat and tidy.
So our challenge, as councils, as community groups, as a whole system in any locality – is to keep as much activity as we can in the collaborative sphere; to realise that this is the place where people are likely to come together and make connections, share ideas, be creative and positive and participative. The governed sphere will always be hugely important in keeping things safe and evidenced and accountable, but rely on this space for radical new, co-produced solutions and we’ll continue to be disappointed.
Wednesday, May 27, 2015
Social Impact Bonds: UK and comparative perspectives – Part 2
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.
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:
- 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.
- 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.
- 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?
- 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 CSin@opm.co.uk or on 0207 239 7877.
Tuesday, May 26, 2015
Social Impact Bonds: UK and comparative perspectives – Part 1
OPM’s Director of Evaluation, Research and Engagement, Dr Chih Hoong Sin, spoke at the 2015 Social Investing and Corporate Social Responsibility (CSR) Forum, held at Meiji University in Tokyo.
Chih Hoong was invited by the Department of Public Management and the Institute of Non-profit and Public Management Studies, in partnership with the Japanese Ministry of Education, Culture, Sports, Science and Technology (MEXT). The invitation to speak followed on from a visit to OPM by a delegation of senior academics from Meiji University back in November as part of a research project funded by the Japanese Government to support the launch of the first Japanese social impact bond (SIB).
At the event Chih Hoong spoke alongside colleagues from the UK Cabinet Office, PwC, and St Mungo’s Broadway on the emergence of Social Impact Investment and the Transformation of CSR in the UK and Japan.
Chih Hoong presented his observations of the development of Social Impact Bonds in the UK and on the lessons to be learned for the future. A number of findings he reported related to the ‘first wave’ of UK SIBs, which were of particular relevance to Japanese colleagues in the early stages of SIB planning:
- The early UK SIBs have been accused of having ‘system-defined outcomes’ concerning a definition of ‘social impact’ (largely those that ‘saved the system money’). However, this is changing according to Chih Hoong, with other ‘voices’ now entering the picture. SIB models are not ‘fixed’ and are continually subject to experimentation
- Commissioners, providers and investors involved in early SIBs all experienced ‘invisible costs’ not anticipated at the outset, such as those associated with burdensome and overly complex governance structures. OPM’s evaluation of the ‘Essex SIB’ is evidence of efforts in the UK to surface these previously invisible costs and factor them into the design of future SIBs.
- Chih Hoong suggested that the outcomes focus of SIBs can mean that ‘evidence-based interventions’ (or those tried and tested) are privileged at the expense of innovation, but again this is already changing. A number of UK SIBs support interventions that have a less extensive evidence base.
- There are implicit assumptions around what the ‘evidence’ in ‘evidence-based interventions’ refers to, such as evidence of outcomes, rather than implementation. Chih Hoong also questioned what the implications of prioritising evidence from randomised controlled trials were, when, for instance, the UK has far fewer RCTs of social policy compared to the US.
- Chih Hoong highlighted that in the UK, government and local authorities have a number of statutory duties for the provision of certain services. Legal responsibility for the service is retained while the provision of the service is commissioned out, meaning that if it ‘fails’, the authority is still required to intervene, which can be very costly. The rigour of a SIB’s outcome monitoring may reduce the risk of this happening in future.
- The cultural, political and social context of different countries, such as the strength of the welfare state, and the relationship between central government, local government and business, will influence the nature and function of SIBs. In the UK, SIBs have been spear-headed by central government, so although this level of drive and commitment may not be feasible elsewhere, there is nothing in the SIB model that stipulates this initial central government involvement – nor is the UK trajectory the only route. Japan’s well developed business sector could lead for instance, and the emergence of ‘provider-led’ SIBs in the UK could help reduce transaction costs for commissioners. The US experience shows how SIBs can be driven by cities and localities instead, attracting the attention of very large financial institutions. Federal government has then provided support later in the process for SIBs to become ‘bond-like’ in order to be classed as a recognisable asset and transacted at scale.
Chih Hoong reflects on discussions with Japanese colleagues in Social Impact Bonds: UK and comparative perspectives – Part 2 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 on CSin@opm.co.uk or 020 239 7877.