How could Social Impact Bonds help tackle multiple needs?

There is a growing debate about social investment and the role it could play in tackling multiple needs.  MEAM has invited a series of guest blogs on this topic, starting with Caroline Hickson, an Investment Associate at social investment intermediary Numbers for Good.

Public services in the UK are generally set up to support people with single, severe problems, and typically contracted on a “fee-for-service” basis. It’s a difficult challenge to move away from this, but one where the nascent sector of Social Impact Bonds (SIBs) could help.

What is a social impact bond?

SIBs are a new way of delivering public services. They are, in essence, a contract between service providers, outcome funders and social investors, usually structured by an intermediary such as Numbers for Good.

nfg_graphicAt the outset of a SIB, the outcome funders (normally commissioners) decide on the key outcomes they want to achieve – for example, reducing the number of rough sleepers. The chosen third-party provider (usually a charity or social enterprise) delivers a service aimed at achieving these outcomes.

The social investor provides the initial funding to the service provider, and also takes on the risk of the service not achieving its outcomes. If the service is successful and outcomes are achieved, the outcome funder makes payments that are used to pay back the investor.

This avoids the provider facing an initial cash deficit (called a working capital shortfall), where it incurs costs but has not yet been paid. For a charity or social enterprise, this is a risky position to be in. If the intervention does not work (i.e. it does not achieve the expected outcomes), no outcomes payments are made and the loss is borne by the social investor.

Simple, right? Admittedly, it’s a little more intricate than traditional “fee-for-service” commissioning but the emphasis on outcomes can help both providers and commissioners to focus on what they want to achieve. A SIB approach for those with multiple needs could be beneficial in several ways.

Where could Social Impact Bonds help?

Firstly, a SIB approach encourages innovation. The provider – who usually is the most knowledgeable about the beneficiary group – is free to adapt its service as it sees fit to achieve the outcomes. The transfer of the financial risk to the investor should mean the commissioner is also willing to support new types of services, as they do not pay if outcomes are not met.

Secondly, it encourages a longer-term and more holistic view of public services. People with multiple needs often do not have one severe problem, but several ‘low-level’ issues that are likely to get worse over time without help. A social investor is able to support early intervention as it has the capital to spend that a commissioner may not, and typically has longer time horizons.

Finally, because measuring and assessing outcomes is a key component of the SIB (otherwise the outcome funder will not pay), an outcome-based or SIB approach should improve the service provider’s measurement of impact. This ‘impact audit’ process for providers enables them to improve their service and ensure they are really achieving the outcomes they want.

Is it the right approach?

The process of structuring a SIB is more involved than that of a ‘fee-for-services’ contract, but feedback from SIB participants has been that the discipline involved in doing this has ultimately been beneficial.

Of course, as with any commissioning strategy, whether a SIB approach is better for beneficiaries will depend on the time, care and attention taken to ensure the outcomes are well-defined, effective and avoid any perverse incentives. And, of course, in some cases, a payment-by-results or outcome-based approach may not be appropriate.

For those interested in whether a SIB could deliver better outcomes, the recently launched £80m Life Chances Fund and Cabinet Office-backed Government Outcomes Lab provides funding and support for setting up and managing SIBs. Intermediaries such as Numbers for Good also work with all stakeholders on the feasibility and execution and management of social impact bonds.

Creating a SIB involves a shift in all of our thinking about the way we deliver public services – but the benefits to providers, commissioners and, most importantly, beneficiaries can be significant.

The Life Chances Fund will issue themed invitations for SIBs across six themes. Expressions of interest for the first two themes, children’s services and drug and alcohol dependency, are due by 30 September 2016. Further themes will be young people, early years, healthy lives and older people’s services.

From their offices in Newcastle and London, Numbers for Good create financial solutions that allow organisations to fund social and environmental projects. Get in touch with them at info@numbersforgood.com.

We must work together to prevent drug-related deaths

New figures published last Friday by the Office for National Statistics shows that deaths related to drug misuse have risen to record levels, reaching 43.8 deaths per million in England and Wales in 2015. The increase is driven in part by increasing purity and availability of heroin, which has led deaths involving heroin and morphine to double since 2002.

Behind these numbers are individuals whose lives have been cut short. Deaths from drug misuse are avoidable, and it is vital that we learn from the evidence and work together to prevent them.

Figure 4: Age-standardised mortality rates for selected substances, deaths registered in 1993 to 2015 (Source: ONS)

Age-standardised mortality rates for selected substances, deaths registered in 1993 to 2015
(Source: ONS)

In light of this, MEAM welcomes the timely publication of a new report on understanding and preventing drug related deaths in England. It reflects the findings of an expert working group convened by Public Health England, to which we were glad to contribute evidence.

The report highlights the fact that “people who move between services for drug treatment, mental health, housing support or physical health, and have the most complex needs, are at significant risk of drug-related deaths.” We know this group includes people in contact with the criminal justice system.

It sets out a number of principles for action. These include maintaining the provision of drug treatment and effective harm reduction, and widening the provision of naloxone, a drug which can prevent death from overdose.

We particularly welcome the key recommendation that we should meet complex needs through coordinated, whole-system approaches and aligned commissioning. This recommendation is consistent with wider evidence on what makes for effective support for people experiencing multiple needs.

The report highlights the importance of supportive physical healthcare and psychiatric care. It also reflects the significance of key transition points within the criminal justice system, noting that the risk of someone dying in the first four weeks after leaving prison is significantly lower if someone is receiving opioid substitution treatment.

We endorse the report’s call for further research on the links between drug-related deaths and wider factors such domestic abuse, hospital admissions and successful completion of drug treatment. This is a key element of ensuring providers across all sectors can act early, effectively and together to save lives.

MEAM welcomes bold new strategy on poverty

The Making Every Adult Matter coalition – formed of Clinks, Homeless Link and Mind – welcomes the Joseph Rowntree Foundation’s new strategy ‘We can solve poverty in the UK’, published today.

In it, the JRF sets out a comprehensive picture of the scale and challenge of poverty, and highlights the specific challenges faced by people experiencing multiple and complex needs. We support their call for “flexible and co-ordinated support that builds on people’s assets, strengths and relationships.”

CrrE-mLXEAADsQ8

The strategy clearly sets out the links between poverty and the wider needs people experience, demonstrating the need for a joined-up strategy across government on these issues. For too long, policy and services have addressed homelessness, substance misuse, mental ill health and contact with the criminal justice system in isolation. This prevents people from getting the co-ordinated, flexible support they need to move away from the most damaging forms of poverty.

We are pleased that the accompanying report features York’s work using the MEAM Approach – a framework to help local areas design and deliver better co-ordinated services – and the Big Lottery Fund’s Fulfilling Lives programme.

Continue reading

MEAM welcomes Select Committee report into homelessness – now government must act

Today the House of Commons Communities and Local Government Committee has called on all parts of government to commit to a common approach to ending homelessness, and ensure that people with multiple and complex needs receive the support they need.

homelessness

Publishing a report on its inquiry into homelessness, the Committee made specific recommendations for government, and backed a private members bill on homelessness prevention. Chair Clive Betts MP said:

“The scale of homelessness is now such that a renewed Government strategy is a must. It needs to not only help those who are homeless but also prevent those vulnerable families and individuals who are at risk of becoming homeless from joining them. All Departments will need to subscribe to this common approach and contribute to ending homelessness.”

The MEAM coalition partners welcome this important report, and particularly its call for a cross-government strategy to end homelessness. Coalition director Oliver Hilbery and Homeless Link’s head of policy Helen Mathie gave evidence to the inquiry, alongside Agenda, the alliance for women and girls at risk and the No Recourse to Public Funds Network.

We are pleased that the Committee recognised the need to support homeless people experiencing multiple and complex needs including vulnerable women, care leavers, people with mental health and substance misuse problems, ex-offenders and those who have been affected by trauma and abuse. These individuals face challenges that require a specific and coordinated approach.

The report calls also calls on government to:

  • Develop a new cross-departmental strategy to end homelessness
  • Review the funding of mental health services for homeless people and develop a clear action plan for change
  • Support the Homelessness Reduction Bill 2016-17, introduced by Bob Blackman MP and backed by a broad coalition of charities including Homeless Link. The proposed legislation has been published also today and sponsored by the Committee
  • Exempt all supported accommodation from the proposed reductions to the level of social housing rents and Local Housing Allowance, and provide supported housing providers with “the certainty they need to plan ahead and deliver services”

A response from the government is expected later this year and the Committee will review progress on its recommendations in a year’s time.

The MEAM coalition will continue to work with its partners, frontline services and people with lived experience to advise and challenge government on homelessness and related needs.

New Life Chances Fund recognises the need for a joined-up approach to complex social issues

Yesterday the government launched the Life Chances Fund, an £80 million programme of social investment funding directed at a range of complex social issues. Expressions of interest are now open for two of the themes addressed by the Fund: drug and alcohol dependency and children’s services. Further call-outs around young people, early years, healthy lives and older people’s services will follow.

Photo: @minforcivsoc

Rob Wilson MP, Minister for Civil Society, at the launch of the Life Chances Fund.
Photo: @minforcivsoc

At the launch, Minister for Civil Society Rob Wilson MP offered reassurance that working closely with the voluntary and community sector will continue to be a priority for government.

“This is about central and local government, academia and the voluntary sector all coming together to work at tackling some of the most entrenched social challenges we face,” he said, adding that addressing these challenges is even more important in light of the social divisions highlighted by the referendum.

The Life Chances Fund is designed to encourage more use of Social Impact Bonds, which commission services based on up-front payment by external investors to be repaid by commissioners as outcomes are achieved. Overseen by the Cabinet Office, it will ‘top up’ investment in locally commissioned Social Impact Bonds that deliver new and innovative programmes (rather than replacing existing funding). The £80 million fund is pooled from different departmental budgets, in the expectation that savings will be made across government.

The design of the Fund reflects a growing recognition that resolving complex social issues, such supporting people who are experiencing multiple needs, requires a cross-government approach. £30 million of the funding is allocated specifically for proposals addressing drug and alcohol dependence, and the scope for these recognises the close links between substance misuse and other outcomes including stable accommodation, reduced offending and improved mental health.

The Fund was conceived as part of a wider Life Chances Strategy, first announced by David Cameron in January as the centrepiece of the government’s commitment to tackling social disadvantage. The planned launch of the strategy was postponed in the wake of the EU referendum result, but officials have indicated that work on its themes is set to continue over the coming months.

MEAM welcomes the new funding provided by the Life Chances Fund, although it is clear that it can only achieve its aims if local areas continue to receive sufficient general resources to deliver the existing services on which any new interventions would build. We will continue to engage with officials as work on the Fund develops, and make the case for a comprehensive cross-government strategy to address the challenges faced by people experiencing multiple needs.

Yesterday also saw the launch of the Government Outcomes Lab, a partnership between the Cabinet Office and Oxford University’s Blavatnik School of Government aimed at providing independent support, data and evidence on outcomes-based commissioning. This is a particularly welcome development given the mixed success of payment-by-results to date, highlighted by the National Audit Office. The need for a more sophisticated understanding of the outcomes that services are trying to achieve has been a consistent theme of MEAM’s policy work with frontline services and people with experience of multiple needs.

If your organisation is considering social investment funding, we encourage you to read the Life Chances Fund criteria and application process. Expressions of interest are being invited from commissioners, service providers and intermediaries, and are due by 30 September 2016.