Will this SIB ‘be the change’ that keeps commissioners committed to contracting for outcomes?

Mayday Trust supports young people experiencing homelessness and tough life transitions. Rather than providing hostel or supported accommodation, it provides housing in the social and private rental markets, helping young people avoid institutionalisation. They work through an evidence-based, highly personalised and strengths-focused approach, known as Personal Transitions Services (PTS), combining a coaching offer alongside access to mainstream accommodation.  

In 2014 Mayday worked with 3 county councils, including Northamptonshire, to bid for UK government’s MHCLG funding for Social Impact Bonds (SIB) through the Fair Chance Fund, but were unsuccessful. Undeterred, they persuaded Northamptonshire to fund a six-month pilot, during which they monitored the same metrics they had designed for the SIB.  In the SIB, payment would usually be triggered when young people find accommodation, take advantage of training, and secure and sustain employment.  But in the pilot, Northamptonshire Council paid in advance.

However, Mayday felt that the principles of an outcomes-based contract would suit their personalised approach. While traditional fee-for-service commissioning contracts are typically highly prescriptive in specifying activities they will pay for, an outcomes-contract allows the provider to work adaptively around the needs of the individual. The investment part of a SIB mechanism can provide flexible working capital to allow the provider to work in this way, until the results generate payment from commissioners.

Mayday got a second chance to launch the SIB when a fund called Commissioning Better Outcomes (CBO) launched. This fund offered local commissioners a percentage 'top-up'. Mayday applied, based on the same rate-card metrics as the their prior MHCLG SIB bid and pilot programme. There was a delay while Northamptonshire council restructured and created a Community Interest Company (CIC) to handle its commissioning function, which it called First for Wellbeing. The SIB finally launched in 2017.

What are the signs so far that it could ‘be the change’ that convinces commissioners to adopt the intervention and the SIB concept?

While Mayday liked an outcomes-focussed approach, the commissioners were more circumspect - but still curious about commissioning on a Payment by Results (PbR) basis. At a time of huge change in the commissioning relationship, the SIB concept invoked both wariness for the commissioner and enough confidence to attract its buy-in. 

First for Wellbeing, the recently formed commissioning CIC, was not familiar with working through a SIB or with Mayday. This wariness on both counts was eased by working with Mayday’s charismatic and tenacious CEO and the piloted rate card.  The 24% top up outcomes-payments grant from CBO also provided incentive.  However, Mayday’s status as an incumbent contractor with Northamptonshire added to the reasons why the commissioner felt it safer to test its curiosity cautiously with Mayday. Rather than diving in headlong, the commissioning CIC capped the potential outcome payments, and kept the project small enough for Mayday to clear a limbo dance under EU competitive procurement thresholds.  

However, from the investment manager's point of view, this made for a rather small deal relative to the amount of work that had been needed to structure the investment and an outcomes contract (even with the benefit of the template SIB contract offered by Centre for SIBs).  Despite this, the project received backing from Bridges Outcome Partnerships, who saw a longer-term benefit in demonstrating that the SIB could offer commissioners more value-for-money per young-person housed than typical supported housing contracts.

Bridges Outcome Partnerships say they have been impressed by the continuous learning and improvement of the model driven by Mayday’s Social Impact Manager, and that they are keen to back the scaling-up of this approach. It is also in Mayday’s CBO funding plan to make their learning and model widely available to homelessness service groups nationwide.  

However, it took the original 2-year pilot of the PTS model, £30k of contract readiness and £30k of CBO development funding, plus a pilot and the CBO SIB to create a confidence-raising launch-pad for any future scaling-up of the model.  Bridges and Mayday see the rate card developed in the process as key to making the future selling and scaling of the approach easier, not least given the continual churn in commissioning audiences.

Without further top-up funding being made available, a SIB approach to commissioning PTS will one-day have to win over local commissioners on its own merits.

Questions for the years ahead 

So questions abound for the two final instalments in our story of the CBO Mayday SIB in the next couple of years - among them:

• What role has the rate card and the principle of PbR played in maintaining buy-in now and into future?
• What benefit has the investment-backing brought to Mayday, in terms of providing greater freedom to fail, flexibility to course-correct and resilience to ride out the risks presented by coronavirus?
• How will the experience have affected Mayday’s relationship with commissioners, and Northamptonshire’s own interest in SIBs more generally?
• Will followers of Mayday who adopt the model elsewhere also want to use an outcome-focused approach to contracts and, if so, will Mayday recommend it looks like PbR, a SIB, or something else?

For now, the indications are that Mayday intend to ensure that commissioners allow them the flexibility to continue to be the change that matters: 

“Traditional contracts constrain providers (because of their specificity). Outcomes-based contracts allow them the freedom to deliver differently, test new approaches and deliver better outcomes.” Pat McArdle, CEO Mayday Trust