Social Impact Bonds (SIBs) have recently become part of the public services landscape in the UK and internationally. In a SIB contract, public sector commissioners partner with private or Third Sector social investors to fund interventions that seek to tackle complex social issues. Under these arrangements, non-government investors cover the upfront costs necessary to set up the interventions implemented by service providers, while the government commissioner commits to pay a return on investment if pre-defined desired outcomes are reached.
In the field of health and social care, nine projects across England, collectively known as the SIB ‘Trailblazers’, have received seed funding from the government’s Social Enterprise Investment Fund to evaluate and potentially implement a SIB. The Department of Health’s Policy Research Programme commissioned an independent evaluation of these projects from PIRU, in partnership with RAND Europe, to explore their potential benefits and costs.
The first evaluation of Social Impact Bonds (SIBs) in health and social care in England suggests that, while they encourage a stronger emphasis on demonstrating results than comparable ways of commissioning public services, there is still no clear evidence that SIBs lead to better client outcomes or that they are more cost-effective than alternative approaches.
The study evaluated nine projects across England, collectively known as the SIB ‘Trailblazers’, that received seed funding from the Government’s Social Enterprise Investment Fund to develop and potentially implement a SIB. The team analysed Trailblazer plans and contracts, and conducted interviews with national policy makers and local participants in Trailblazer SIBs (commissioners, investors, SIB specialist organisations and providers), as well as local participants in comparable non-SIB services.
The SIBs funded a wide range of different interventions for different clients: older people who are socially isolated; people with multiple chronic health conditions; entrenched rough sleepers; adolescents in care; and people with disabilities requiring long-term supported living.
Three models of SIB were identified: the Direct Provider SIB; SIB with Special Purpose Vehicle; and the Social Investment Partnership. Each allocated financial risks differently, with providers bearing more of the financial risk in the Direct Provider model than in the others. Frontline staff were more aware of the financial incentives associated with meeting client outcomes in the Direct Provider model than in the Special Purpose Vehicle model.
Providers in the Trailblazers were more outcome-focused than providers of comparable non-SIB services. Despite this, the up-front financing of providers by investors tended to be provided in instalments related to hitting volume and/or throughput targets rather than improvements in client outcomes. The bulk of the subsequent payments to investors for achieving targets came from central government and sources such as the Big Lottery rather than from local commissioners.
Only one Trailblazer reported having made any cashable savings during the evaluation period as a result of its SIB-financed interventions. Typically, the planning of the SIB services and subsequent oversight were better resourced, and the services more flexibly provided than in similar non-SIB services.
The findings show that policymakers should focus on the components within SIBs that show promise in developing outcome-based contracting, such as personalised support to clients, and greater flexibility and innovation in service delivery, while avoiding the notion that SIBs offer the only way forward for such contracting.
Despite the claims that SIBs should generate rich quantitative information on the costs and outcomes of SIB-funded and non-SIB services, in practice, the researchers were unable to access suitable quantitative data to make this comparison.
The main demonstrable success of SIB projects in health and social care has been in helping marginalised groups who had, previously, been neglected by public services. It is much less clear that SIB-related services for other groups, such as people with chronic health conditions, have led to marked improvements in health.
This research provides important information for governments looking for new financing mechanisms for health and care. So far at least, cashable savings from SIBs, despite early hopes and rhetoric, remain unproven. Policymakers should learn from different models, but SIBs are no panacea for better commissioning of health and care services.
The research concludes that SIBs, as currently conceived, may have a role in specific circumstances, especially where outcomes are uncontroversial, easily attributable to the actions of the provider and easily measured, but are unlikely to be widely applicable in public services.
A limitation of the study is that, with the exception of one Trailblazer which ended during the evaluation, the other four operational SIBs were evaluated during their early to mid-period of implementation, making it possible that the performance of these projects will change before they conclude in two to five years’ time.
Fraser A, Tan S, Boaz A, Mays N. (2020) "Backing what works? Social Impact Bonds and evidence-informed policy and practice." Public Money & Management. This article can be accessed here >>
Dayson C, Fraser A, Lowe T. (2019) "A comparative analysis of Social Impact Bond and conventional financing approaches to health service commissioning in England: the case of social prescribing." Journal of Comparative Policy Analysis: Research and Practice. This article can be accessed here >>
Fraser A, Tan S, Mays N. (2019) "To SIB or not to SIB? A comparative analysis of the commissioning processes of two proposed health-focused Social Impact Bond financed interventions in England." Journal of Economic Policy Reform. This article can be accessed here >>
Tan S, Fraser A, McHugh N, Warner M. (2019) "Widening perspectives on social impact bonds." Journal of Economic Policy Reform. This article can be accessed here >>
The report "Evaluation of the Social Impact Bond Trailblazers in Health and Social Care: Final Report" by Alec Fraser, Stefanie Tan, Kristy Kruithof, Megan Sim, Emma Disley, Chris Giacomantonio, Mylene Lagarde and Nicholas Mays can be accessed here >> The appendices for this report can be accessed here >>
The third international conference on SIBs, jointly organised by PIRU, RAND Europe, Newcastle Business School and the GO Lab was held on 6-7 September 2018 in Oxford. Details and links to presentations can be accessed here >>
The blog "SIBs may provide components for outcome-based contracting, but they are not a panacea" by Stefanie Tan, Alec Fraser and Nicholas Mays can be accessed here >>
The blog "Japan highlights innovative Asia Pacific model for Social Impact Bonds" by Chih Hoong Sin and Ichiro Tsukamoto can be accessed here >>
The blog "We should ask three big questions about SIBs" by Eleanor Carter and Clare Fitzgerald can be accessed here >>
The blog "Investors need rigorous assessments of Social Impact Bonds" by Katy Pillai can be accessed here >>
The blog "Academics can show governments how to evaluate SIBs more rigorously" by Chris Fox can be accessed here >>
The blog "Impact bonds could offer a paradigm shift towards more effective public services" by Emily Gustafsson-Wright can be accessed here >>
The blog "Social Impact Bonds offer challenges and opportunities in health and social care" by Alec Fraser, Stefanie Tan and Nicholas Mays can be accessed here >>
The blog "Next step: develop Social Investment Partnerships" by Ben Jupp can be accessed here >>
The blog "SIBs don't work for complex problems because they're unaccountable to service users" by Stephen Sinclair, Neil McHugh and Michael J Roy can be accessed here >>
The blog "Dream of Social Impact Bonds should not blind us to their dangers" by Mildred Warner can be accessed here >>
The blog "Ethical risks of marketising public services demand caution" by Julia Morley can be accessed here >>
The blog "SIBs may be overhyped but their focus on outcomes is a vital policy innovation" by Alex Nicholls can be accessed here >>
An international conference on SIBs was held in London in September 2016. The programme and presentations can be accessed here >>
A literature review on SIBs was published in Social Policy and Administration in October 2016 and can be accessed here >>
An interim report of the SIBs Trailblazer evaluation was published in March 2015 and can be accessed here >>