On Social Impact Bonds

Social Impact Bonds are quite an innovative 'payment by results' approach which includes up front investment - you can find good explanations of SIB on the Social Finance and  Young Foundation websites

However, you could paraphrase SIBs as: 'PFI meets Big Society'. Similarities being the drawing in of investment to drive an outcome-based delivery which, had the public sector not been starved of cash, would normally have been public sector funded and managed. They should encourage innovation and be user focused in design (something which we have discussed over the last few days).  Of course investors expect a return, which they are due if the designed intervention works. That return can be a long way away.  Some big issues must be that:

1. Public accountability for service delivery should not be abdicated due to a lack of finance - politicians need to be democratically accountable for public services whether or not the delivery channel is the public sector;  
2. There should not be a 'pic 'n' mix' or 'cherry picking' approach to who the services are delivered to - if that's the case the most vulnerable will really pay the price; 
3. There needs to be a sophisticated approach to selecting the investor and the delivery partner - this cannot be left to 'commissioners' alone but will require a wider cross-functional approach drawing on procurement expertise too;
4. There also needs to be a clever approach to developing the payment by results menu and tariff - it needs to see clear and lasting measurable deliverables otherwise the long term social impacts, which are at the centre of the rationale, may be masked.  
5. How do you schedule the Payment By Results method when the desired change is only realised beyond the life of the contract?
6. How can you link outcome to input?  In other-words could some secondary factor either contribute to the achievement or lack of achievement? If that's the case who bears the risk and reward?
7. Investors cannot be assumed to have only a public good ethos; will they switch investments to more lucrative opportunities over time?
8. Can we assume the SIBs will not create another industry for bankers and lawyers - we know how cumbersome and costly PFI and PPPs were;
9. Can we be sure that a robust options appraisal will be taken in the selection of this single option?
10. Can we be sure that those entering into SIBs have properly risk assessed the choice and will proactively manage those risks?
11. Can we be sure that the painful lessons of PFI and PPPs, and DWP's payment by results approach been learnt from? 
12. These should not be a distraction from place-based joint commissioning - that still needs to be worked on and harvested to its full potential.

Today two new SIB projects were announced, one in London and one in Essex.  At face value they look really good and I wish them well.  More importantly I wish those in need of the services well - I hope that bad implementation does not add to their woes.