Social Impact Bonds: What happens when commissioners of early intervention services are no longer the investors?
Local commissioners are finding it increasingly difficult to invest in early intervention services, certainly along traditional commissioning lines. The second report from Graham Allen’s Early Intervention review looks at different types of mechanism, such as social impact bonds (SIBs), that could attract investors to fund programmes, marking an interesting move away from commissioners and investors necessarily being the same.
With a SIB, commissioners pay investors (not providers) only as and when outcomes improve to a specified extent. To work in investment terms, this needs to result in a reduction in demand for higher cost interventions. The first pilot is in Peterborough, aimed at reducing reoffending rates, but the model is new to the improvement of life chances for children and young people. Social Impact Bonds offer a real chance to invest in early intervention services upfront.
Clearly to attract investors, there needs to be robust upfront evidence that interventions will achieve savings down the line through improving specified outcomes. “Waiting to see” – a previously popular approach – will be seen as too risky an investment. In the UK, only a small number of the many early intervention programmes currently in use have been rigorously evaluated, meaning there is a poor evidence base for confident investment.
Along with an evidence base, programme fidelity is also critical for investors, as a lack of fidelity typically results in loss of all potential economic and well being benefits. In particular, fidelity problems can arise as an intervention is brought to scale – or able to be routinely provided locally. In the UK, variable implementation means there has not always been strong fidelity.
This poses the question of whether one programme can be effectively delivered by different providers. Since we know that fidelity can be lost through insufficient resources, especially training or loss of service intensity at the point of delivery, there may need to be an onus on potential providers to show they can deliver an evidence based model with fidelity. Or perhaps only some providers will be accredited to deliver across the country?
Unless accreditation or licensing opportunities are extended to local organisations, there will be a loss of benefits that accrue from local knowledge and community connections. Ideally, there will be scope for licensing of a range of providers, including local ones, to deliver evidence based service models based on the ability to ensure fidelity at a price. The commissioning specification will be based around the efficient delivery of fidelity.
Investors will also have a critical interest in the relative attribution of success to services newly commissioned as part of an early intervention bond, and pre-existing services. And not only services: local access to resources policies and mechanisms, such as CAF and the plethora of eligibility panels are all intrinsic to any targeted early intervention. Resource targeting decisions take place within the commissioning process and variations in local policy will potentially impact hugely on the success of the programmes commissioned. A specification around how assessment and targeting will be addressed will probably need to be contained within the bond.
A range of other variable local conditions – such as deprivation rates and job opportunities – also impact both on work to improve outcomes for vulnerable families, and the associated ?nancial risks. The Early Intervention Review recognises that such factors can signi?cantly affect the costs and bene?ts of programmes, and that there are difficulties in generalising cost- effectiveness from one area to another.
So if commissioners of early intervention services are no longer always to be investors, how will it all be brought together locally? What models might link investors, commissioners and providers? Commissioners might work with consortia who have a role both as a managing agent for providers, and as an intermediary with investors. Social Finance propose a Social Impact Bond Delivery Agency to coordinate investors, commissioners and providers, source a basket of programmes and manage performance. And Graham Allen recommends that a national Early Intervention Foundation brokers links between investors and commissioners, as well as supporting the development of the evidence base.
And since an investment bond is a contract designed around the achievement of specified outcomes, such as ‘children ready for school’, it will cut across commissioning agencies. To date, this has presented a real challenge in local areas because the potential future savings on more intensive services often accrue to several agencies and not necessarily those making the original investment. Children’s Trust arrangements have had some success in supporting the creation of pooled budgets to address this, and now, Community Budgets as well as Graham Allen’s proposed Early Intervention Places could enable the pooling of different budgets aimed at the same people or same problems, and provide a mechanism for agencies who will be saving down the line to contribute to the upfront costs. This is not a short haul though, and to have any chance of success, such arrangements will need to be sustainable over the long term.
© Carola Bennion
Social Finance has led the development of Social Impact Bonds.