Social Impact Bonds and Homelessness

Qualitative evaluation of London Homelessness SIB

The Department for Communities and Local Government recently published (2 September 2014) a very interesting Qualitative Evaluation of the London Homelessness Social Impact Bond (SIB) where providers were paid on a payment by results basis for their effectiveness in helping rough sleepers in London.

This scheme produced a substantial amount of learning because two different organisations (St Mungo’s and Thames Reach) were each contracted to deliver services to half of a cohort of 831 entrenched rough sleepers in London. Each organisation chose a different form of SIB and it was possible to compare outcomes directly on a like-for-like basis.

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The Model

The Scheme targeted these rough sleepers with a personalised, flexible approach delivered by keyworkers which helped them to access existing provision and achieve sustained long-term positive outcomes which included “reconnection” to their home country for non-UK nationals where this was the most appropriate outcome for them.

The cohort was identified by the CHAIN database and defined as rough sleepers who on 31st October 2012 had been seen sleeping rough and/or stayed in a rough sleeping hostel in the last three months and had been seen rough sleeping at least six times over the previous two years.

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The Social Impact Bonds

Each provider developed a different structure to finance their SIB contract. StMungo’s established a Special Purpose Vehicle to hold the risk while Thames Breach funded their intervention through social investors’ unsecured loans – in this model the risk is shared. In both cases providers invested their own equity:

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Payment by Results

There were five goals for providers to try to achieve through this £5 million pound project with payment by results apportioned as shown below:

• Rough sleepers into stable accommodation (Non-hostel tenancy sustained for 12 and 18 months) – 40% of PbR pot
• Reduced number of individuals were sleeping each quarter – 25%
• Individuals confirmed to be reconnected to their home country outside of the UK – 25%
• Employment and employability (Level II qualification/sustained volunteering/sustained part of full-time employment) – 5%
• Better managed health (reduction in Accident & Emergency episodes) – 5%

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Outcomes

Performance information is provided for the first year of the project (although was not available for the health outcome by the report deadline):

•  Rough sleeping – both providers struggled to meet the target but St Mungo’s exceeded their target in quarter four.
• Stable accommodation – both providers performed strongly at getting  people into accommodation, later reports will establish whether they have sustained it.
• Reconnection – both providers failed to reach initial targets although Thames Reach performed better.
• Employment – mixed performance with few qualifications and volunteering placements but targets exceeded for employment.

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Conclusions

Overall the evaluation concluded that the SIB/PbR process had stimulated providers to bring together different elements of best and effective practice in an innovative manner using a “navigator” approach where a single role:

“supports a client along the entire pathway from the street/point of first contact and blends direct support with wider provision brokered and coordinated to sustain long term outcomes”

The report cautions about the significant amount of work involved for both commissioners and providers in developing a SIB and the payment mechanism for a PbR approach.

However, the initial conclusion is optimistic about the PbR approach underpinned by Social Impact Bonds:

[the structure] “enables a flexible, outcomes focused approach not restricted to a set model of delivery. Evidence to date suggests that the balance in the SIB PbR does not create perverse incentives to achieve inappropriate outcomes, although this will only be confirmed as delivery builds in the second and third years. Outcomes that are currently behind target will need to be achieved for contract value and investment returns to be realised.”

I’m very interested to see if providers are able to improve performance around reducing rough sleeping and reconnection in the next two years of the project.

For more information about Social Impact Bonds and Payment by Results, check out my PbR resource pack which is updated on a regular basis.