There is "no clear evidence" that social impact bonds lead to better outcomes for beneficiaries or that they are more cost-effective than other approaches to commissioning public services, a government-funded evaluation has concluded.
The exercise, which was carried out by the Policy Innovation Research Unit at the London School of Hygiene & Tropical Medicine and the research organisation Rand Europe with funding from the NIHR Policy Research Programme at the Department of Health and Social Care, says its findings show that SIBs are "no panacea for public service reform".
Policymakers should therefore focus on the parts of SIBs that offer the most promise for developing outcome-based contracting, the evaluation says, without suggesting that SIBs are the only way of achieving this.
SIBs work by attracting investment to fund projects, often involving charities and social enterprises, and reimbursing and rewarding the investors if the project is successful.
The concept has been used in other areas of public policy – notably in rehabilitating criminals – but there have been questions about whether the SIB model could be widely replicated.
The researchers, who studied nine SIB-funded projects across England, were also unable to find "suitable quantitative data" to compare the costs and outcomes of SIB-funded and non-SIB services.
Of the nine projects studied, only one reported having any cashable savings as a result of its SIB-funded work, the evaluation says.
SIBs therefore, according to the evaluation, have a role to play in "specific circumstances" where outcomes are "uncontroversial, easily attributable to the actions of the provider and easily measured".
But SIBs are unlikely to be widely applicable in public services, the evaluation found.
Nicholas Mays, professor of health policy at the London School of Hygiene & Tropical Medicine, said: "The main demonstrable success of SIB projects in health and social care has been in helping marginalised groups who had, previously, been neglected by public services. It is much less clear that SIB-related services for other groups, such as people with chronic health conditions, have led to marked improvements in health.
"So far, at least, cashable savings from SIBs, despite early hopes and rhetoric, remain unproven. Policymakers should learn from different models, but SIBs are no panacea for better commissioning of health and care services."