News and Comment

Social Impact Bonds: UK and comparative perspectives – Part 1

Tuesday 26 May 2015


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 or 020 239 7877.