An Introduction to Social Impact Bonds. Tamsyn Roberts, Cabinet Office 25 September 2014

Transcription

1 An Introduction to Social Impact Bonds Tamsyn Roberts, Cabinet Office 25 September 2014

2 Social Investment and Finance Team leads government policy to support social investment INCREASING THE SUPPLY OF CAPITAL INTO THE MARKET CREATING AN ENABLING ENVIRONMENT FOR ACCESSING THAT CAPITAL SUPPORTING DEMAND FOR CAPITAL BY GROWING THE INVESTMENT PIPELINE 2 Social Impact Bonds and the Centre for SIBs

3 To understand SIBs you need to understand PbR Payment by Results means paying for real-world change rather than just activities Resources E.g. hospital budget Inputs E.g. Doctors, equipment Outputs E.g. operations Outcomes E.g. Improved health In a PbR contract a commissioner agrees to pay a provider for the achievement of defined outcomes Services Provider Commissioner Outcomes payments (based on results) 3 Social Impact Bonds and the Centre for SIBs

4 SIBs are a way of financing a Payment by Results contract SIBs introduce a social investor who pays the upfront cost of delivering services and receives a return based on outcome payments from Government 4 Social Impact Bonds and the Centre for SIBs

5 SIBs share a lot of the advantages of PbR Increasing innovation in public service delivery by focusing commissioning on achievement of outcomes rather than prescribed services enabling providers to innovate Improving performance and reducing costs by focusing providers on achieving outcomes, incentivising them to work together in new ways, and only paying for success Increasing and accelerating learning about what works by embedding rigorous ongoing evaluation of programme impacts into programme delivery. 5 Social Impact Bonds and the Centre for SIBs

6 SIBs also have advantages beyond PbR Diversifying the provider base by enabling more organisations to compete for contracts and reducing dependency on a few large providers. VCSEs are expert in working with marginalised groups and can be more cost effective as they tackle issues holistically Leveraging investor expertise investors undertake rigorous due diligence on organisations and interventions they invest in and often have deep subject expertise in the policy area Attracting external investment for early intervention by making available external capital to fund R&D activity, social investors will finance innovative preventative approaches and government only pays if outcomes are achieved Avoiding the downsides of PbR by putting social impact first and aligning incentives between all parties which can avoid creaming and parking 6 Social Impact Bonds and the Centre for SIBs

7 There are 17 SIBs in the UK and many more in development Perthshire & Kinross: NEETs North West England: NEETs Manchester: Children in care Greater Merseyside: NEETs West Midlands: NEETs Worcestershire: social isolation Cardiff: NEETs Nottingham: NEETs Peterborough: recidivism Birmingham: children in care Essex: children in care Essex/ Nationwide: Adoption London: NEETs (4 projects) GLA: homelessness 7 Social Impact Bonds and the Centre for SIBs

8 UK SIBs are tackling a variety of issues London Homelessness SIB Social Issue: Rough sleeping in London Commissioner: GLA /CLG Providers: St Mungo s & Thamesreach Investors: CAF Venturesome, Big Issue Invest, Orp Foundation & others Outcomes: Reduction in rough sleeping; moves to settled accommodation; increased employment; reduced use of A&E. Outcome payments: Max 5m Essex Children in Care SIB Social Issue: Children in Care Commissioner: Essex County Council Providers: Action for Children Investors: Big Society Capital, Bridges Ventures & others. 3.1m Outcomes: Number of care days saved Outcome payments: Max 7m North West NEETs SIB Social Issue: Young people NEET Commissioner: DWP Innovation Fund Providers: Teens and Toddlers Investors: Big Society Capital, Bridges Ventures Outcomes: School behaviour and attendance, qualifications, employment Outcome payments: Max 30m (Innovation Fund) 8 Social Impact Bonds and the Centre for SIBs

9 SIBs are also being developed internationally Where? Issue / Outcomes New York Rikers Island New York & Rochester New South Wales Massachusetts Salt Lake City Saskatchewan Reduction in reoffending Reduction in reoffending Children in care Reduction in reoffending Pre-school education Children in care Commissioner Investors Providers City of New York Goldman Sachs ($9.6m) + Bloomberg Philanthropies ($7m grant guarantee) New York State Government of NSW State of Massachusetts State of Utah Provincial Government of Saskatchewan BAML Wealth Clients ($12.2m) + Rockefeller Foundation ($1.3m guarantee) Private investors + Govt capital protection Goldman Sachs, Kresge Foundation + others ($18m) Goldman Sachs ($4.6m) + JB Pritzker ($2.4m) Connexus Credit Union ($500k) + Private Investor ($500k) Rotterdam NEETs City of Rotterdam ABN AMRO + Start Foundation ( 680k) Brussels Migrant employment MDRC - Adolescent Behavioural Learning Experience (ABLE) Centre for Employment Opportunities UnitingCare Burnside Newpin programme Roca Inc United Way of Salt Lake EGADZ Saskatoon Downtown Youth Centre BusinezzClub City of Brussels Private investors ( 234k) Duo for a Job 9 Social Impact Bonds and the Centre for SIBs

10 Centre for SIBs provides support for SIBs Information and practical tools for developing SIBs Social Outcomes Fund provides top-up outcome payments for SIBs Expert information and guidance on how to develop SIBs C4SIBs website and guides Practical tools to develop SIBs easily and cost effectively template contract, unit cost data Showcasing how SIBs are transforming public service delivery and building and evidence base case studies and evaluation data Stimulating and sharing the latest thinking, research and media coverage 20m to pay for a proportion of outcomes payments for SIBs in complex policy areas 4 awards to date: Manchester City Council: children in care Council for Voluntary Adoption Agencies: adoption of hard-to-place children Worcestershire County Council: social isolation Birmingham City Council: children in care Sits alongside Big Lottery 40m Commissioning Better Outcomes (CBO) fund SOF 20m 20% outcome payments CBO 40m Commissioner 80% outcomes payments Investors Intermediary 10 Social Impact Bonds and the Centre for SIBs Provider

11 Investors in SIBs are eligible for SITR Social Investment Tax Relief individuals investing in regulated social sector organisations (Charity, CIC, BenCom) can reduce income tax by 30% of cost of their investment Investors investing in accredited SIBs are also eligible for SITR SIB SPV must be a company limited by shares and hold a contract with a public sector commissioner for social outcomes. Regulations and Guidance to be published this Autumn. 11 Social Impact Bonds and the Centre for SIBs

12 There is also wider market support for SIBs Technical Assistance Support for early stage proposals: Workshops Technical guides support for commissioners to develop early stage SIB proposals Technical assistance grants 3million grant pot funded by Big Grants of up to 150k To purchase bespoke technical assistance to develop full SIB proposals Investors Bridges Social Impact Bond Fund: 14m fund Investments up to 3m in VCSE delivering SIBs Other investors interested in SIBs: Growing support provider market 12 Social Impact Bonds and the Centre for SIBs