Blog written by Toby Eccles of Social Finance.
Today is a big day for those that care about producing outcomes and making an impact. New Economy, in partnership with HM Government, is publishing unit cost data for a whole variety of costs within government, in one place, for the first time. For the 1% of you that have just leapt in the air shouting yippee, you don’t need to read further. For the 99% who gave a slightly questioning grunt of “so what?” or even “you what?” here are ten reasons why you ought to be just a teeny bit more excited.
- Enables change: Ever shot at a target you can’t see? It can be quite irritating. Unit cost data are the building blocks for understanding the economic consequences for government of negative outcomes. Thus for anybody pitching an idea to government they are a vital part of building the case for change. While most if not all of these have been in the public domain somewhere before, now, instead of scrabbling about checking various sources, people can simply go to one place and look it up. And you know that government stands behind the numbers. Marvelous.
- Encourages effective measurement: In a world of no data, the anecdote rules. For many of us it is a tragedy that the most effective way of selling in the social world is still through telling harrowing stories about poor little children and their terrible lives. Stories are an important element of bringing work to life, but they have to be backed up with numbers and analysis. Unit cost data push more effective measurement and analysis into the core of the discussion. Even if one organisation doesn’t use them, another will, changing the nature of the discussion.
- Incentive to act: finding out the true cost of negative outcomes provides an incentive to public, private and voluntary agencies to build programmes that drive costs down and improve outcomes.
- Encourages joint commissioning: Most services are commissioned by one commissioner focused on specific issues. Unit cost data starts to show the potential for commissioners working together. For example, if a provider of intensive family therapy is commissioned by children’s services, and is finding from staff that the impact is wider, on substance misuse, or employment, then the unit cost data starts to give them a route into exploring the benefit they are providing to other commissioners. At the very least, it points out the benefit of collecting data on multiple outcomes, with a view to protecting the service in the future with alternative revenue streams.
- International precedent: Generally government unit cost data is hard to come by all over the world. This is a fantastic precedent for other countries to follow and can be used by social organisations and think tanks to lobby them to do so.
Social Impact Bonds
Social Impact Bonds (SIBs) are a way of enabling innovation, creating flexible contracts around social outcomes and providing linked investment. An issue in their development is that most interventions have a variety of social outcomes affecting different parts of government. The Cabinet Office Social Outcomes Fund and the Big Lottery Commissioning Better Outcomes Fund are designed to help with this problem by providing a top up payment to represent the value to these wider parts of government outside of the direct service commissioner. This unit cost data is really helpful for the development of SIBs and the use of these top-up funds:
- Encourages verification and transparency: If you disagree with a number, or if you think a number ought to be available, you can bring it up! This database is a start, and provides an important route to check and challenge government costs and data.
- Providing a source for secondary impact information: While most commissioners know their own costs they generally don’t know the costs faced by wider government. So figuring out the value to the rest of government and the potential for a top-up is tricky. Looking through different public sources is frustrating, it never gives you the number you were looking for, and the numbers you do find are inconsistent. The ability to just look up costs makes it much easier to apply to these funds and understand the potential benefit of an intervention.
- Reduces the cost and time of assessing potential SIBs: At the moment, far more time is spent trying to find and verify them than is in building the models to develop them. So unit costs will make it easier and cheaper to assess the value of a Social Impact Bond.
- Ensures consistent assessment: With all the applicants to the funds using the same unit cost data it becomes easier to understand the different applications and compare the impact and numbers they are using. Assessment becomes quicker and cleaner.
- Makes it easier for commissioners to try SIBs: All this makes it easier for commissioners to try using SIBs as a tool for reshaping services, increasing impact and reducing cost.