More presentations from the NCVO Annual conference: http://www.ncvo-vol.org.uk/networking-discussions/blogs/20591 will help you innovate in your work. Fiona Sheil, Public Service Delivery Officer, NCVO This expert-led workshop explores the future of contract design, what it means for funding public services and th e legal and cultural implications for organisations like yours. Public service contracting is becoming more diverse in both size and structure. With large contracts being broken up and work being passed down supply chains in sub-contracts, you see a number of challenges arising. If you are involved in contracting , our panel of senior national charity finance directors and civil servants will help you navigate some of the key difficulties, including modelling cash-flows in supply chains and managing the sharing of risk between providers.

1. PM6 Surviving in the new contracting
landscape
• Aisling Duffy, Chief Executive, Certitude
• Chris Sherwood, Scope
• Jim Clifford, Baker Tilly

2. Contracting for Personalised
Outcomes
Aisling Duffy
Chief Executive
5 March 2012
A dynamic force in social care!

3. A little bit of background
• Certitude is a social care group with a turnover of
circa £25M
• 630 staff delivering a range of support options for
people with mental health needs and learning
disabilities.
• Support individuals with complex needs and
profound and multiple disabilities
• Currently operate mainly in Greater London with
provider status in 14 local authority areas
A dynamic force in social care!

4. • Income sources:
90% income
from contracts
So what's personal about that?
A dynamic force in social care!

5. Our Guiding Principles:
• Choice and control on all aspects of one’s life
is the right of everyone we support now or in
the future
• Coproduction leads to better outcomes
• Deliver value for money; will include
restructuring services and delivery methods
A dynamic force in social care!

6. What do we mean by Co-production?
• Recognising people as assets
• Building on people's capabilities
• Promoting mutuality and reciprocity
• Developing peer support networks
• Breaking down barriers between
professionals and users
• Facilitating rather than delivering
NEF and NESTA
A dynamic force in social care!

7. Current Landscape – our perspective
• Contracts are not outcome focussed
• Spot contracts do not achieve personalisation
• Financial necessity requires us to think and act differently -
cost cutting is increasingly the driver for change
• We are well placed to offer solutions - commissioners need
and welcome ideas
• Radical new approaches are needed by all parts of the system
• If we can get it right for those with the most complex needs
then everything is possible
A dynamic force in social care!

8. Why Current Commissioning and contracting doesn’t
deliver on outcomes?
•An over focus on needs
Joint needs assessments often focus purely on the need of a cohort often failing
to identify their inherent or potential capacity and asset base
•Lack of useful, reliable and up-to-date local intelligence
This leads to localised services being designed and evidenced using national
data which often fails to identify with local needs and aspirations
•Risk averse commissioning reduces opportunities for real innovation
Often due to a lack of useful dialogue between providers and commissioners
about risk and unexamined anxieties
•Commissioning and procurement as a reductive process
This leads to localised services being designed and evidenced using national
data which often fails
A dynamic force in social care!

9. Why Current Commissioning and contracting doesn’t
deliver on outcomes?
•Short-term and static specifications and contracting
Limited opportunities for services to change in order to meet shifting needs
of cohorts and limited maintained dialogue between commissioners and providers
•Collaboration is weak
This leads to a lack of effective working between commissioners and
providers and between providers and providers
•Orthodoxy to create economies of scale produces static markets
This leads to commissioning not shaping supply chains or creating overly
dominant prime providers
• “We already do co-production”
Misunderstanding of translation of the core principles of co-production often
leads to a lack of meaningful engagement with people who use services, their carers
and families A dynamic force in social care!

10. What commissioning approach is needed?
• Assess needs, aspirations and assets
Engages with people in meaningful ways in order to gather localised intelligence of
needs, aspirations and assets
• Outcomes and impacts are assessed dynamically, using diverse methods
Measurements of the success of services is continually made using a range of
touchpoints and feedback options to ensure that measurement is informed by
individuals that include: people who use services, families, carers and front-line
staff.
• Accountability panels to challenge and spread co-production
Accountability for upholding a co-production and collaborative led approach to
commissioning will be distributed across panels made up to include: community
members, people who use services, staff, service providers and commissioners.
A dynamic force in social care!

11. What commissioning approach is needed?
• Specifications are iterative and change over time to best meet the needs and
assets
By ensuring better community intelligence, better processes of design and smarter
governance, commissioning will drive the options for supply
• Co production principles define and assess all interactions
All planning of processes and interactions are led by the 6 principles of co-
production and success is assessed against these too.
• Actively shapes markets
By ensuring better community intelligence, better processes of design and smarter
governance, commissioning drives the options for supply.
A dynamic force in social care!

12. What are we trying?
• Renegotiating Relationships
• Piloting Individual Service Funds
A dynamic force in social care!

13. Renegotiating Relationships - Contracts
• Offering pathway solutions
• Collaboration – alliance contracts
• Specifications based on recovery outcomes
• Agency to Agency time bank
• Working Together for change – coproduction
A dynamic force in social care!

14. Piloting Individual Service Funds
• Tailoring support to people, including the money available;
• Can be achieved within a range of contracting options
including block arrangements
• Offering the greatest possible choice and control to people in
existing services;
• Changing the relationship between budget recipient and
service provider;
• Better outcomes for people that take managed budgets.
A dynamic force in social care!

15. Key features of an ISF (DH, 2011)
• All or part of a personal budget held by a provider on an
individual's behalf where the money is restricted for use on
that person’s support and accounted for accordingly;
• No specific tasks predetermined so that the personal budget
holder is empowered to plan with the provider the
who, how, where, when and what of any support provided;
• Flexibility to roll money/support over into future weeks or
months and to bank support for particular purposes;
• Accompanied by written information that clearly explains the
arrangement and confirms any management costs to come
from the personal budget;
• Portability so that the personal budget holder can choose to
use the money in a different way or with a different provider.
A dynamic force in social care!

16. Contractual implications
• An ISF is not a contract – accountability and liability remains
between the council and the provider unless it is a direct
payment;
• ISFs do not necessarily require different forms of
contract, though there may be a need for contractual
variations;
• Variations relate to issues around subcontracting, banking of
hours and “cash conversion”;
• Spot contracts: the contract sum becomes the ISF;
• Block contracts: the block is disaggregated on the basis of
people’s respective needs into ISFs for each person;
• Direct payments and personal budgets: the allocated sum
becomes the ISF
A dynamic force in social care!

17. What have we learned?
• Working in partnership with supportive and innovative
commissioners and other partners is key
• Start from a clear view of what success looks like
• Concentrate as much on the practice as the money
• Be Risk aware not impotent
• Share stories of success especially with staff
• Do business differently – breakfast meetings work!
A dynamic force in social care!

18. A dynamic force in social care!

19. Two Innovations for social
Change
Chris Sherwood, Director of
Innovation & Development
NCVO Annual Conference – 5th
March 2012

21. Needs and drivers for change
• External factors including cuts, localism, improved
outcomes and public service reform are spurring us to
action.
• We are part of the sector wide Think Local, Act Personal
initiative to promote personalisation.
• Although our internal drivers are also strong. We have
refocused ourselves as an organisation that is about
social change.
• We want to transform to meet the aspirations of our
customers.
• We see this as the innovation imperative.

22. Our services are undergoing significant
transformation
Support
Information Education
Care

23. Disability Works UK
• Scope is a founding member of DWUK. We are one of 8
different specialist disability employment organisations
who are working together including Leonard Cheshire
Disability and MIND.
• DWUK is a is a 2nd tier sub-contracting consortium
Welfare to Work contracts.
• DWUK delivers 11 Work Programme contracts across the
UK.
• Scope is the lead partner for a Work Programme contract
in Sussex, Surrey and Kent working with Avanta.

24. Why does Scope need to collaborate?
• Provides access to markets that we might not otherwise
be able to compete in.
• Maximises our power in those markets by working with
like minded organisations.
• National reach combined with local delivery.
• Allows us to share risk through coordinated approach
and shared resources.
• Achieve economies of scale by maximising the
resources and capacity within the consortium.
• Share learning and insight to improve practice.

25. Why does Scope need social investment?
Investing in campaigns, advocacy and support services
• Whilst its impact on the lives of disabled people and their
families is significant, our crucial support and advocacy work
does not generate a direct revenue, so requires 100% grant
funding.
Investing in new direct services
• Those services that need pump priming but can be sustainable
in the long term. Could use a combination of donations, soft
loans and commercial loans.
Investing in income generation and profile raising
• We need loans to fund areas of our work that can afford to pay
a small return e.g. new retail outlets or donor acquisition.
• This an area where we think bonds will be most applicable.

26. The Scope Bond Programme
• A scalable, re-usable way of generating large amounts of
social investment at varying yields and terms.
• £20M program (in practice limited to £10M outstanding debt).
• Listed on EURO (MTF) stock exchange.
• Unsecured.
• Investment decision based on ‘Scope as investible
proposition’ e.g.
• £29M fixed assets;
• £9M reserves;
• £4M surplus on £100M p.a turnover for last two years.

27. The First Tranche
• £2M
• 3 year maturity
• 2% yield
• Invested in income generating activities
• Subsequent tranches invested in direct service
delivery e.g. our parent befriending service Face 2
Face and paying higher yield

28. Final thoughts
“Gentlemen, we have run out
of money. It is time to start
thinking.”
Sir Ernest Rutherford

29. Any questions?

30. Jim Clifford
jim.clifford@bakertilly.co.uk
+44 7860 386 081
Social Impact Bonds in Public Commissioned Services
Presentation to NCVO Conference 2012
(…with thanks to CVAA and PACT…..)

31. Social Impact Bonds in Public Commissioned
Services
• Payment by results models
• Social Finance and the emerging SIB
• Collaboration and Risk sharing
• Funder markets
32

32. Payment by Results
• Why PBR ?
• Economic trade
• Meaningful measures
• “Informed” Output
Inputs to Activities to Outputs to Outcomes to Impacts

33. Social Finance and the emerging SIB
•Issuer defines terms
•Multi-party funding; same
terms
•Application for specified
social purposes
•Investor reward balance

34. 3-DTypology of SIB-style funding....
Bridging
to PBR Regular or
With deferred
profits
Capital No
interest
Variable
Special interest
Fixed
donors interest
Repayable
Equity Permanent Listed
(regular or
risk capital
bullet)

35. Collaboration and risk-sharing
•Risk dumping ?
•Risk trading?
•Risk arbitrage ?
...to those who can..

36. Funder markets
Match the project to
the funder market:
• Public funds
• Third Sector
• Corporates
• Individuals THINK......
• Family offices • Project
• Provider
• Purpose
• Presentation

37. Questions