A report from Better Society Capital shows how the use of outcomes contracts is spreading in the UK, and quantifies their benefits in tackling social and health problems.
Research commissioned by UK-based social impact investor Better Society Capital (BSC) concludes that the use of social outcomes contracts to deliver public services in the UK have created nine times more in public value than they have cost to provide.
The report, produced by ATQ Consultants for BSC, calculates that outcomes contracts have generated £1.9bn (€10.6bn) of total value to the taxpayer through positive improvements to society, such as improved health, reduced crime or helping people with mental health issues find employment.
BSC said that 18 outcomes contracts aimed at improving child and family welfare had created even stronger impact than for outcomes contracts overall, with more than £10 in public value for every £1 spent by government. This represented a taxpayer saving of £230.7m, according to the report.
Under social outcomes contracts, charities and social enterprises provide services on behalf of public authorities to tackle such social issues, on the basis that they will be paid if they hit pre-agreed targets. These types of organisations are regarded as the best placed to offer flexible, holistic solutions to the most difficult social challenges.
These contracts, pioneered in the UK, not only take pressure off public authorities’ resources and remove upfront costs for authorities, they also potentially reduce the burden of dealing with similar social problems in the future where prevention strategies have been deployed.
Co-payment models
Aman Johal, BSC’s managing director told Impact Investor that this latest research expanded on work done by ATQ two years ago, not just by being able to consider a larger pool of outcomes, but also by basing its methodology on input from an expert technical advisory panel of academics, practitioners and civil servant economists
She said the research reconfirmed that outcomes contracts not only prevented social problems and delivered meaningful change in communities with complex needs, but also saved the taxpayer a large amount of money.
At present, the outcomes of these contracts in the UK are typically paid for either by central government alone or by central government and local authorities in partnership.
“We think this co-payment model in particular works very well. We would really like to see more central government-backed outcome funds in the areas where there is already a significant track record of where this works, such as homelessness, health, children’s services, education and employment,” she said.
BSC has been in discussions with political parties ahead of a UK general election on 4 July to encourage a new UK government to support wider use of outcomes contracts. The main opposition Labour Party is currently well ahead in opinion polls.
“We’re really optimistic that the election presents an opportunity for some longer term thinking from government around public services, and that this research can contribute towards them,” Johal said.
Tangible results
Healthcare is one area where outcomes contracts has been demonstrated to reap benefits. The report says outcomes contracts have reduced demand on the health service equivalent to a total saving of £128.6m at a corresponding cost to the commissioner of just £26.63m.
BSC said that, at a time where the resources of the UK’s National Health Service (NHS) were stretched and its funding restricted, outcomes contracting was an invaluable tool in treating preventable conditions.
In one healthcare-related example cited by BSC, Thrive, a community-led service working with 1,500 people with multiple long-term mental and physical health conditions in Lincolnshire, central England, succeeded in reducing hospital attendance and costs by 35%, while also reducing GP usage by 11%.
Thrive supports participants by setting them up with a link worker, who helps them to decide how they would like help to improve their health, wellbeing and independence. This holistic alternative to traditional medical treatment includes a range of pathways, from joining social groups to arranging gym memberships.
The Thrive programme is supported by BSC and delivered by Bridges Outcomes Partnerships, which has supported more than 65 outcomes partnerships across the UK.
Lisa Hilder, Assistant Director for Strategic Planning at North East Lincolnshire Health and Care, which helps deliver Thrive Social Prescribing, said the outcomes partnership helped to direct and manage resources as effectively as possible.
“Working with social outcomes contracts enables commissioners to get to the heart of the matter – what is the difference we are making for our communities? It enables us to demonstrate the impact for people, health and care organisations and by extension our local system,” she said.
Better Society Capital recently changed its name from Big Society Capital. The social impact investor was established in 2012, via a government initiative, as an independent organisation, initially funded by assets in dormant bank accounts in England, as well as money from the UK’s largest banks.
