Public service

An innovative form of public service commission has generated millions in financial savings for the government

  • New research reveals that Social Performance Contracts have generated £10 of social, economic and fiscal value for every pound spent by government since its launch a decade ago.
  • This is the first published study of the public value generated by these contracts to date.
  • The research comes at a time when there is increased pressure on government budgets and scrutiny of public spending.

New research has found that an innovative approach to public service delivery saves nearly £3 for every pound spent by government, reducing the cost of tackling complex social issues such as homelessness and poverty. unemployment.

The report commissioned by social impact investor Big Society Capital found that so-called social performance contracts have so far saved £397million on government budgets and delivered ten times the public benefits of the value of the contract.

Previously known as social impact bonds, these contracts are a form of public service commission where seed capital from socially motivated investors is used to pay local delivery organizations to solve complex social problems, funding of the government being released only when positive results are obtained. The report shows that this approach generated £10 of social, economic and fiscal value for every pound spent by Commissioners; including nearly £3 in tax value (cash saved and costs avoided).

The Results for all The report is based on independent analysis conducted by ATQ Consultants and is believed to be the first published study of the value realized by such contracts in the UK to date. It is launched in a context of increased surveillance of public expenditure; with government borrowing at record highs and the cost of living rising rapidly, all of which put pressure on the delivery of public services.

Launched to MPs at an event in Parliament on June 21, the report shows how the UK has become a world leader in this approach; having carried out 90 such projects to help more than 220 social enterprises and charities provide personalized care to more than 55,000 people.

For example, a number of SOCs were launched to tackle rough sleeping in 2018 by the UK Department for Housing Communities and Local Government (now the Department for Levelling, Housing and Communities). The largest program was in Greater Manchester (GM): the GM Homes Partnership. This program housed over 90% more people than originally planned for half the cost of similar interventions funded by other means and the SOC model was used to scale up homelessness support services for young people in ten local authority areas of Greater Manchester.

Other examples of SOCs in action include West London Zone; a mentorship program that currently works with 732 children in schools to help them realize their potential and thrive as adults. And the Skill Mill: a social enterprise focused on rehabilitating young ex-offenders which, since its launch in 2013, has worked with almost 200 ex-offenders and has had a recidivism rate of 9% – compared to 72% for the cohort at national scale.

While national and local governments are good at delivering generalist public services at scale, for difficult areas such as homelessness, which require a multi-agency approach, traditional public service silos struggle to adapt the long-term support to individual needs. The result is that the individual’s problems persist and worsen, leaving public services to combat crises rather than prevent them.

Through Social Results Contracts, local social sector delivery organizations receive working capital, giving them the flexibility and support to constantly innovate and improve services to ensure they are responsive to needs. individuals.

Civil Society and Youth Minister Nigel Huddleston said: “I welcome Big Society Capital’s ‘Outcome for All’ report, which highlights the significant development of social impact bonds, or social performance contracts, as a tool for commissioning public services over the past 10 last years.

“The government is proud to have played a key role in this journey by championing innovative results funds, such as the Life Chances Fund, which shifts the focus from delivering activities and results to delivering results. real impact we want to achieve.”

Right Honorable Theresa Villiers MP said: “The UK is the world leader in results-driven public sector commissioning. This report, the first of its kind, highlights the scale the UK has achieved over the past decade in funding better outcomes for complex social issues, and it is important that we continue to lead the way by shifting emphasis from public sector control to prevention. and away from firefighting a response to the crisis”.

MP Danny Kruger said: “This is exactly the sort of solution that is needed to keep the UK leveling – saving £3 for taxpayers on every £1 the government spends. We need to build on the momentum I’ve seen first-hand across the country, leveraging public funds through Social Performance Contracts, attracting significant private investment, and delivering great outcomes for disadvantaged people.

Aman Johal, Chief Investment Officer at Big Society Capital, said: “As public budgets tighten, it will be essential for the government to consider alternative financing solutions to challenges such as the cost of living crisis and the race to the top.

“We are delighted to have new data which, for the first time, demonstrates how SOCs can empower local authorities and communities to implement local solutions, combining true stakeholder collaboration and accountability. much stronger in terms of results compared to traditional contractual mechanisms.

“While the approach is not without its challenges, evidence shows there is potential for social performance contracts to grow and continue to add value to improving public service delivery in the UK. . We hope that this report will open meaningful discussions among policy makers on the potential and future of SOCs as an approach to effective delivery of public services for people.