James Ronicle (Ecorys UK) and Neil Stanworth (ATQ Consultants) presented at the National Children's Commissioning and Training conference (NCCTC) on commissioners' experiences of social impact bonds (SIBs), drawing on our research and consultancy support in this area. We focused particularly on the experiences of commissioners of Children's Services.

1. “A lot of effort but worth it”
Commissioners’ experiences of social
impact bonds
The National Commissioning and Contracting Training Conference
Hayes Conference Centre, Derbyshire
9 June 2016
James Ronicle, Ecorys UK & Neil Stanworth, ATQ Consultants

2. What is a Social Impact Bond?
In simple terms, SIBs are a form of Payment by Results, where
the upfront capital is provided by an external investor
Provider has to source
working capital to fund
services until payments are
made
Payment for outcomes
Commissioner Provider
Specification of outcomes
Services / interventions
Diagram source: ATQ Consultants

3. In simple terms, SIBs are a form of Payment by Results, where
the upfront capital is provided by an external investor
Commissioner Provider
Specification of outcomes
Services / interventions
Social Investors
Payment for
outcomes
Up-front capital to
fund services
What is a Social Impact Bond?

4. SIB Development
SIBs in the UK
There are 32 SIBs in the UK in a range of policy areas
Source: Cabinet Office

5. SIB Development
SIBs to support Children in/on the Edge of Care
Many argue that there is a strong business case for a SIB for
children in/on the edge of care
• Essex CC (ECC) has higher than average
no. of young people in care. Care costs
£20k - £180k per year / per individual
• Big Society Capital & Bridges Ventures
provide £3.1m loan
• Loan funds AfC to provide MST for 380
young people at risk of entering care
over 8 years. They aim to divert 110
from care.
• Payments made when child is diverted
from care
• ECC anticipate saving £17.3m, of which
up to £7m will be paid in outcomes
payments – net saving of £10.3m
• Investors could receive up to 8 – 12%
annual interest
Essex SIB: Children at risk of going into care
Source: Cabinet Office

6. SIB Development
SIBs to support Children in/on the Edge of Care
Children in/on the edge of care is the most common issue
addressed by locally commissioned SIBs
Commissioner Outcome Provider
Essex Avoidance of care Action for Children
Manchester Migration from residential to foster care Action for Children
Birmingham Migration from residential to foster care Core Assets
Cardiff Migration from residential to foster care Core Assets
Various Adoption placements It’s All About Me/Various
Various Migration or avoidance of care EBSI/Various
N. Somerset Reunification or avoidance of care TBC (In procurement)

7. SIB Development
Issues faced by commissioners
Both our research and engagement suggests a number of
challenges for commissioners of SIBs
Understanding
investors
expectations
Complexity
Agreeing
contracts to
suit all parties
Policy
uncertainty
The role of
intermediaries
Stakeholder
engagement
Unnecessary
“mystique”

8. SIB Development
Issues faced by commissioners
The market is finding ways to meet these challenges
Spot purchase models
(e.g. IAMM – EBSI)
Tariff-based payments
per outcome
Simpler SIB structures
(1 provider, 1 investor,
no intermediary)
Make it easier for commissioners to buy
outcomes, including at small scale, but VFM
may be compromised
If set correctly, reward performance and
avoid complex measurement
Avoid complex governance and
unnecessary management costs

9. SIB Development
Issues faced by commissioners
Commissioners can more easily develop SIBs by focusing on what
they do best – commissioning
“ Commissioners should decide what outcomes
they want to achieve, and set a fair price for
the delivery of those outcomes. If they do that,
the market will respond. ”
Leading Social Investor
and SIB Fund Manager