Essex – no longer the only way

We are entering the fourth month of our support and engagement contract for Commissioning Better Outcomes[1] on behalf of the Big Lottery Fund. So far we’ve held 4 workshops, and spoken to over 100 commissioners and service providers who have shown an interest in developing a Social Impact Bond (SIB) in their community. Many of them were introduced to the concept by reading about the Essex SIB, which was the first Local Authority commissioned Social Impact Bond, launching in November 2012. This was a watershed moment for Social Impact Bonds as it hinted at the potential of this mechanism to transform local government service provision across the UK. Since then countless blogs, articles and publications have espoused the value of contracting on outcomes, and the rigour performance management can bring to a programme.

Over a year on from the Essex launch, SIBs are being developed in areas such as troubled families, long term health conditions and rough sleeping. But it is still children’s services where we are observing the most interest. A few weeks ago we hosted a webinar looking at the Manchester Social Impact Bond that is currently in development, which, unlike Essex (which looks to prevent entry to the care system) is looking to improve the outcomes for children already in care. This blog will take a look at the Manchester SIB, and some of the differences between the two projects.


At the heart of a Social Impact Bond is the social issue it is designed to address. In Peterborough it is the lack of support for short sentenced offenders, in Essex it is children at risk of going into care, and in Manchester it is poor outcomes for children in residential care.

Social Issue

Manchester currently has 1,300 children and young people in its care with 177 of these children in residential placements, significantly higher than the national average and its statistical neighbours. The Department for Education estimated the weekly cost of care in a residential placement at £2,689 per child/young person per week, compared with an average cost of £676 for foster care. There is also consistent evidence of the social cost; overall those children and young people in residential care have poorer school attendance, a greater likelihood of a substance abuse problem, a greater chance of having entered the criminal justice system, and a greater chance of becoming NEET to name but a few.

Foster care has two kinds of benefits. First, it is seen as giving better outcomes for a young person in terms of their educational, social and emotional well-being. Second, it is more cost effective as compared to the use of an internal or external residential placement.

Manchester came to us with this issue in mind; they wanted to explore how social investment could support young people to transition from residential care to foster care and target those individuals who have experienced the breakdown of multiple foster placements. We designed a SIB model that would allow for the funding of Multi-dimensional Treatment Foster Care (MTFC). This is an intensive intervention where young people live with specially trained foster parents who are supported around the clock by a team of professionals from health, education and social care.  Each set of foster parents looks after just one child for 9-12 months, concentrating on behaviour management to promote emotional stability and the skills needed to live in a family setting. It is expected that 66% of young people will ‘Graduate’ from the programme, meaning they will complete their individual programmes and move on to family-based placements.

Outcome Payments

Unlike the Essex SIB where outcomes payments are based on a reduction on children entering the care system, Manchester operates a tariff model where outcomes payments will be made for a child achieving milestones such as staying on the MTFC programme for the duration, and after graduation remaining in a family setting and therefore away from residential care.

Although a year of MTFC costs £100,000 per total package of support, the residential costs per year are estimated at £125,000, for the remainder of a young person’s care journey. If successful, it will be both MCC’s Children’s Services and Central Government benefiting from the cost savings. This makes Manchester an obvious candidate for “top-up” payments from the Big Lottery and Cabinet Office’s Outcomes Funds.


In some cases the Essex Social Impact Bond can be directly replicated.  Other social issues may require detailed analysis of the local area in order to design a model to address these specific issues, but the more SIBs in development, the more pooled knowledge there is to share.  There is also a plethora of support on offer; the Cabinet Office SIB Knowledge Box is a comprehensive resource of technical guides and case studies, and we are co-hosting with the LGA a series of workshops focussing on different aspects of Social Impact Bonds. The Big Lottery Fund has also made available up to £3million of technical assistance for commissioners with an EOI accepted by the Funds. We are optimistic that Essex has carved a path for other Local Authorities to follow, and hope that our partnership with LGA and BLF will support commissioners on this journey.

Any further questions, please contact

By Sarah Henderson, Service Manager at Social Finance 

[1] Please note that Commissioning Better Outcomes is part of the “The outcomes Funds” which refers to both the Commissioning Better Outcomes (Big Lottery Fund) and the Social Outcomes Fund (Cabinet Office). For ease of access however there is only one application form and the Funds will decide during assessment which fund is most appropriate for your application and in some cases may decide to jointly fund projects.

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