Can Markets Solve Problems? by Daniel Neyland

Author:Daniel Neyland
Language: eng
Format: epub
Publisher: MIT Press

A Social Impact Bond for Children At Risk

According to the UK national government Centre for Social Impact Bonds,16 since the Peterborough initiative began, there have been 30 more UK Social Impact Bonds launched.17 Each of these has involved investors marking out a recognisable problem with local and national government, delivery agencies, and producing outcome measures of intervention. These parties are active participants in the development of Bonds, creating different structures for intervention according to the problem in focus. Despite this differentiation among Bonds, efforts have been made to standardise to an extent their form and function through an approval mechanism managed by the national government’s Centre for Social Impact Bonds.18 To achieve approval, interventions must follow prescriptive instructions from the Centre, and are provided with template contracts and guidance on using the templates. No two Social Impact Bonds are quite the same, then, but looking in detail at one Bond can reveal how these general prescriptions have been put to work in a particular context.

In Essex, the County Council (a regional political authority with responsibility for such matters as roads and at-risk children) looked to set up a Social Impact Bond as a means to cut costs, but also improve the effectiveness of their actions. Local expectations of efficiency and effectiveness would need to work with national expectations and guidelines on the shape the Bond should take. Key to the development was setting up a contract to establish the different commitments involved and to demonstrate adherence to national government prescriptions. However, in line with existing studies of Social Impact Bonds that have raised concerns regarding the length and costs of contractual negotiation (PIRU, 2015), in Essex from first pursuing the idea in 2010, through negotiations, to then issuing a contract took around 29 months. This lengthy and costly set-up period included establishing a special purpose vehicle to oversee the Bond and deciding on the appropriate form of therapy, how it would be measured and the types of outcome payment made to investors.

The agreed aim of the Social Impact Bond was to deliver a type of therapy that could prevent children from being taken away from their families and placed in residential care operated by the County Council. Such care was costly to the local authority and also frequently led to children experiencing further issues in education, crime and life opportunities. The Council and investors agreed that choosing an appropriate therapy should be evidence-based to ensure the viability of the scheme and to provide a basis for triggering payments to investors. The only approach that the parties agreed upon as providing a sufficiently compelling evidence base had been developed in the US; Multi-Systemic Therapy (MST).19 MST Inc. could provide training for UK therapists to engage with children identified as at risk of going into care. A charity called Action for Children was awarded the Service Provider Agreement to manage the trained therapists in delivering MST through two teams of four therapists, a team manager and business administrator, dealing with four cases at a time on a rolling basis.

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