Are Social Impact Bonds (SIBs) the Next Small Thing (NST)

I sometimes think we need a name for those ideas which, whilst they are not necessarily nonsense, get blown up on rather shaky evidence, into the next big thing. They are usually ideas that:

  • have a cool-sounding, or failing that mystifying name, usually reduced to an acronym
  • apparently have the potential to solve a dizzying range of problems
  • are a neat fit with the prevailing political ideology of the day
  • have found an articulate advocate or two
  • have shaky or limited evidence, and often holes that look bigger the closer you look…

Social Impact Bonds (SIBS) tick all of those boxes. The idea of SIBs is that someone, ideally a private sector investor or even hedge fund, puts up some money to invest in a promising new approach to, say, reducing re-offending, or truancy, or anti-social behavoiur. If the approach works, it generates some savings to the local council, NHS or government. Crime costs the country, so reducing re-offending cuts those costs. The investor gets paid a return on their investment from those savings. The more effective the approach, the bigger the payment. If the approach fails, the investor doesn’t get paid, so it’s the investor who has found the money and taken the risk, not the government. A win all round. Neat.

Here’s where the holes appear. Turning success in social work, or work with offenders, into savings, and measuring those savings is hugely complex. Assuming you can measure the impact and that you can put a cash figure on that impact, people’s lives are complex, so the intervention might be brilliant, but stymied by the failure of another service, over which the agency and its investor has no control.

Even if you can do that, a reduction in the work of a service such as the NHS or the police, doesn’t necessarily equate to a saving. To ‘cash’ the saving, you have to close something, or sack someone. Those are difficult political decisions. Much more likely that new work will rush in to fill the gap in over-stretched services. These are some of the reasons why SIBs pilots have tended to involve a bit of cheating, where the government has applied a nominal saving to a positive outcome, rather than insisting the saving is realised.

So SIBs seem some way off in social care. I’m surprised by often they are suggested in areas of work where outcomes are not consistently measured, let alone turned in measurable cash savings. I can’t see how you can introduce SIBs before a payment by results system is up and running, and payment by results (PBR – a next big thing from a few years back) has not always been a resounding success in itself.

Finally, it’s a feature of ‘next big things’ (NBTs?) that problems start getting re-interpreted in terms of the shiny new solution. SIBs solve the problem of a lack of up-front investment. Where you have a well-defined problem which is resulting in increased spending on an expensive service, and a well-evidenced approach with proven results, but nevertheless no possibility (why?) of government investment, SIBs could well be the answer. But there are other, much less complex ways of investing in risky new ventures and for many cutting edge social care interventions the main problem is not, in fact, lack of up-front investment, it’s lack of evidence, lack of political will, lack of local leadership…

Whilst writing this, I’m aware that our work is often challenged as being over-hyped. And I know how tempting it is to over-claim when trying to sell a radical new idea. Without the risk of falling into NBT territory, there would probably be no radical new ideas. Perhaps the answer is to get equally excited over Next Small Things (NST), which, by pure coincidence, works rather well for an organisation promoting all things micro-scale.

In a blog in the near future, I’m going to look at Local Area Coordination (LAC), one of the most exciting ideas I came across during the White Paper engagement exercise and I’ll try – as dispassionately as I can – to look at whether it should be the next thing, big or small.

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