A coalition of four local councils in the South West peninsula are creating a body where commissioners can co-design social impact bonds and capture evidence of where savings accrue across the public sector.

The four local councils - Cornwall, Plymouth, Devon and Torbay have received £927,000 from the Big Lottery Fund’s Next Steps Programme for the project.

Social impact bonds are vehicles where social investors fund interventions, and are paid a return, if targets agreed with public bodies are met.

Public bodies are able to fund returns to investors, through the savings they predict they’ll make through a more efficient service provided by the new intervention.

Typically savings are cross-departmental, and public commissioners are often reluctant to pay returns for savings which may have benefited another public body.

Charles Uzzell, director of place and resources, at Torbay Council, says its new body, the Local Integrated Service Trust (List) could solve this problem.

The List will allow public sector commissioners to progress interventions collaboratively . “In commissioning preventative work, say helping people with diabetes, some of the benefits may be felt by the NHS, but the council has changed that behaviour but feels none of the financial benefit," Uzzell said.

"With the List commissioners can come together on an activity most appropriate and weigh up the cost and benefits appropriately.”

There is currently a debate around social investment and investment in health outcomes, he said, but investors would need to be sure of commitment from the whole of the public sector.

The List, he said, could help with this. “It will help with capturing where savings lie,” he said.

The four local councils are also considering collaborating on a social impact bond together for children at the edge of care. They are working with Social Finance on the evaluation.

Uzzell (pictured) said the business case for social impact bonds was looking good, but the local authorities were currently testing whether it will work, and in the end may not all come together.

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