Services for young people - Education Committee Contents

Examination of Witnesses (Question Numbers 303-343)

Rob Bell, Martin Brookes, Bill Eyres and Louise Savell

30 March 2011

  Q303 Chair: Good morning. Thank you very much for joining us today. You are all external observers, so how efficient are youth services in terms of both obtaining and spending funding? Does anyone have any thoughts on that? Rob is looking down; I will pick on him.

  Rob Bell: May I offer you our snapshot of this world? We have funding relationships with some 450 organisations. In my programme there are 130 grantees, with the large majority involved in this area. Among them there is a strong appetite to be very good at understanding the impact they make. They sometimes lack the tools and resources to be able to do that as well as they like. What we see among the grantees is fairly economic, lean and effective practice, combining—linking back to the previous discussion—youth work with volunteering and, increasingly, with young people themselves acting as peer support. On how organisations practice, I would say they are effective. We are not a typical, mass market grant maker. We have fewer relationships than many of our peers, and they tend to be for larger grants to newer organisations for longer periods of time. We may fund up to five or six years.

  Q304 Chair: Thank you. Does anyone disagree or take issue with what Rob has said?

  Martin Brookes: I will take slight issue with it. I am sure that Rob is right about the grantees that he works with at the Paul Hamlyn Foundation. We analyse charities and provide advice to funders and to charities themselves. In our experience of the sector, fewer than we would expect and hope can evidence their work, and those that can really stand out and are exceptional. We tend to pick those as our poster children. There is, however, a dearth of evidence in this sector, which mirrors the whole of the voluntary sector. It is not particularly pronounced here; it is a wider problem.

  Louise Savell: I will add that, from a social investment perspective, which is where we come from at Social Finance, there is a general lack of understanding among many youth sector organisations on the potential options in terms of non-grant finance, which might be available to them through loans, equity and equity-like finance. If social investment were to realise its potential for the sector, there might need to be some support to develop the demand side for the availability of capital.

  Q305 Craig Whittaker: Martin, I wonder whether I can tap you for a minute on the new philanthropy capital. You have said that the charities are entering a maelstrom and will need support from other funders to weather the storm. Who are these other funders, and what strong protection can they offer?

  Martin Brookes: Whoever the other funders are, they can't provide enough protection, because the scale of the cuts that a lot of organisations are facing is just too acute. The other funders might be foundations or trusts, such as the Paul Hamlyn Foundation, or they might be private donors. Neither of those sources of funding is big enough. They could also be social investors, but that is too nascent a market to be able to step in and plug the gap. Private donations have been more or less stagnant as a share of GDP for the past 30 or 40 years. For much of that period, there has been a decline in the number of donors, as well, which may have arrested things. But it's quite difficult to see how you could quickly and markedly increase private donations from about 0.75% of GDP, which is about £10.5 billion, when you may be facing anything up to £5 billion of cuts. Foundations give a shade under £3 billion a year. It's very hard to see how that can be scaled up, particularly for those that are endowed and want to protect their endowment. There is a question whether some foundations should behave as endowments, and they may want to spend down, but that's not going to happen quickly, and the scale of the resources available varies. Charities will really struggle to deal with that maelstrom. Many will face—indeed many are facing—serious cutbacks in funding and services as a result.

  Q306 Craig Whittaker: To what extent will they chose to fund previously funded Government projects on the whole?

  Martin Brookes: If you talk to private donors, they will typically say, "I don't like to step in where the Government have a responsibility," but the boundaries as to where the Government have a responsibility are very fuzzy, and, in practice, many private donors will step in. They don't want to step in without a clear exit strategy—particularly wealthy donors—and they don't want to plug a gap indefinitely, but if they can provide some bridging finance and see that the organisation has a plan to supplement and replace Government funding, they are more inclined to get involved. So they will say one thing—that they don't want to do this—but they will often step in. However, to get access to that money, you need the contacts, and a lot of organisations simply don't have the right contacts or the right fundraising capacity. There hasn't been good investment in the last decade or more in fundraising quality. If you want to access wealthy donors, in particular, and you are a small youth charity, it's very hard to do that without knowing where to begin.

  Q307 Craig Whittaker: Are you saying that various businesses already exercise their corporate social responsibility as they should, or do you think they can step up to the mark more?

  Martin Brookes: I deliberately left out businesses as a funding route, because corporate funding of charities directly is pretty weak and it is declining. It gets increasingly tied in with marketing, rather than with genuine philanthropy. A serious question could be asked of corporates, but it's not reasonable at the moment, given the way they've behaved in the past decade or more, to expect them to plug the gap. Whether they should, in terms of a duty, is a different question, but it is very unlikely that they will.

  Q308 Craig Whittaker: Can I ask you all whether charities and philanthropic donors are more likely to invest in projects targeting young people at risk, rather than in open-access provision on things such as youth centres?

  Bill Eyres: At O2, we've tried to do both. The core of the Think Big programme is about giving young people who have got ideas for making change in their communities money, training and other support to make a difference. The way we split the scheme is that roughly 40% is open access. As to the other proportion, we work with around 35 national and local youth charities to refer young people through who come from more disadvantaged, vulnerable situations. We have very much taken a mixed approach in terms of how we manage that. We work with Teesside University to analyse the data on all the young people who come through. The interesting thing is that the young people who have come through the direct-access scheme, which you apply for through the website, come from some of the most deprived areas in the UK. Interestingly, the targeting of open access and the work we're doing with charities is getting through to the most disadvantaged young people.

  Rob Bell: We don't have a policy line on this, but we tend to fund what other witnesses have called a universal progressive approach. That is not a fudged compromise answer, because what goes on is really important. We tend to fund work that allows young people to engage with organisations. "Engagement" is a loaded term. What "engagement" implies is an experience that captures young people's interest and attention, that is profound and long lasting and that involves building up relationships. It also implies that there are routes from that experience into a much more engaged level of support, including referral to external organisations. A typical grant for us would have that sort of approach, where young people can progress, stay attached to the organisation and, if it is needed, get more specialist help, whether it is mentoring, support or referral.

  Martin Brookes: The sort of private donors whom we work with and advise are typically those who are looking for impacts, are quite happy to be working with youth at risk and would prefer doing that kind of thing.

  Louise Savell: Generally speaking, we see more demand among investors to work with the harder-to-reach groups than to fund generic open access services. At the point where you start looking at outcome-based payments of services and financing for that kind of contract, the reality is that while it is lovely to open up services to anyone who might want to go, in terms of the real public benefit, it comes at the more disadvantaged end of the spectrum. The reality is there is a question for Government at that point as to what they are prepared to pay for.

  Q309 Craig Whittaker: Can I ask Rob Bell what programmes for young people remain for both O2 and the Paul Hamlyn Foundation to invest in? What are the budgets?

  Rob Bell: I manage one of four programmes at the Hamlyn Foundation. We spend around £3 million a year on responsive grant making. We are interested in the most disadvantaged and marginalised young people.

  Q310 Craig Whittaker: Is that £3 million just your pot?

  Rob Bell: It's my pot. As a foundation, we are in the middle of a six-year strategy, and we aim to average a £20 million spend a year with the majority in the UK and a smaller amount in India. I have £3 million a year, and we typically make 30 grants a year. We have 140 relationships with grantees and tend to fund for two or three years upwards.

  Bill Eyres: When we launched the programme last year, the initial commitment was to spend £5 million over three years. This year, we have raised our spend to £2 million and extended our commitment to 2015. That is not just in the UK, but in other places where O2 operates, which are Germany, Ireland, Slovakia and Czech Republic.

  We believe passionately that it is about not only the money that we spend directly on the programme, but how we leverage in the skills of the business to work in partnership with our charities, the National Youth Agency and two other charity partners. For example, we have around 2,000 O2 people who volunteer. We are training O2 people to mentor young people's projects, so this year, we are aiming to give backing and support to 900 projects that young people run.

  We also have a second, higher level of support, which involves up to £2,500 for the young people, who also get intensive training. We have been piloting that training this year, and we have some of the most senior people in O2 going in and working with, training and developing young people. I think a lot of the spectrum should not be just on the money that goes into the charity partnership, but on what the business can bring in added value that is powerful.

  Q311 Craig Whittaker: What do you think the Government and commissioners can learn from O2's practice of putting funds directly into the hands of young people?

  Bill Eyres: Our approach is that we believe in young people. Initially, we worked with a whole range of customer groups to find out the community issue that they were most concerned about. The issue that they were most concerned about, from young families through to silver surfers, was young people becoming disconnected from their communities. There was a real passion to make a difference. When we then analysed it and worked with a range of different NGOs, the thing that we needed to do was empower young people who were making a difference at the community level. Social action is about getting money and support into the hands of young people at the grass roots. Some of the work that we did, for example, with New Philanthropy Capital on one of the first young people we had through the scheme showed a social return on investment of about 10 times what we had invested in that young person. That is the learning.

  Secondly, there tends to be a purchaser-provider split, so we take a partnership approach with the National Youth Agency, UK Youth and the Conservation Foundation. We do not look at matters in terms of providers and purchasers, where we hand over the money and do not think about it again. We work very closely together.

  Q312 Craig Whittaker: A 10-times return is a pretty good return. How does that compare with what we currently get from the system? Does anyone know?

  Martin Brookes: There are no great numbers on what can be got from the system, but it is not unusual for good interventions to give that sort of return. Those returns tend to be spread across various spending agencies and they are hard to consolidate, which is one of the issues with designing payment by results contracts. It is a nice return, but it is not an unusual return.

  Q313 Neil Carmichael: Social investment and measuring outcomes is obviously an important area. Louise, do you think social impact bonds should be specifically targeted at certain things?

  Louise Savell: Are people familiar with social impact bonds as a concept? Would it be helpful to give a quick background?

  Neil Carmichael: I do not know.

  Chair: If you can do that succinctly, go ahead.

  Louise Savell: I shall do my best. It is a challenge. Social impact bonds are essentially a financing mechanism that sits behind an outcome-based contract. The Government pay for what works, while investment is raised to pay for services that are provided up front on the basis that investments are repaid in line with the extent to which the outcomes that are targeted improve. That is broadly how they work.

  Q314 Damian Hinds: Can you say the first bit again, Louise?

  Louise Savell: The Government only pay for success. Essentially, improvements in the outcome trigger payment rather than traditional mechanisms of funding when revenue is provided up front. In many ways, the services offer good potential for social impact bonds. There are a range of experienced, high quality service providers in the sector. It is fairly well documented that, when youth services do not work or when youth services are not provided and youth unemployment, teen pregnancy and antisocial behaviour are high, there is a significant social consequence and public cost. All that stands in favour of outcome-based financing.

  The matter is potentially tricky, as Martin has said, in terms of who pays for success. When we look at where the outcomes and benefits to the public sector accrue from improved youth outcomes, there are potential benefits to the Department for Work and Pensions of reduced benefit usage, increased tax take and to the health sector of reducing teen pregnancy and mental health issues, as well as to the Department for Education. The benefits are spread around the Government. There is a real question around if you were to use an outcome-based measure in the space, who would pay for outcomes?

  Q315 Chair: The Treasury is the only answer to that. It would have to buy in, would it not? You need to convince it that it would genuinely see the savings in those Departments later on, and that it would be able to harvest them.

  Louise Savell: Quite. There is certainly a role for central Government in pulling together funding strands from different Departments.

  The other element when thinking about social impact bonds is whether enough is known about what works. The measurement of the outcomes themselves is not that difficult, so we could identify three or four outcomes that generate a public benefit or are tied to public sector savings either in the short or long term, such as youth employment, reducing teen pregnancy, improved outcomes and so on. Martin may have something to add, but where the challenge comes is whether sufficient data exist between specific interventions and their impact on those outcomes to build a robust investment case that would give investors sufficient confidence to put their money behind it.

  Q316 Neil Carmichael: Your answer basically is that they are very good for a lot of Department areas, but you would not necessarily have a generic approach.

    Louise Savell: It's interesting, isn't it? If you look at where there are data between interventions and outcomes, I think the two areas where the link is strongest are around youth employment and reduced offending. However, when you talk to the people in the sector, youth service providers such as Catch22 and others, feel very strongly, and I can totally see where they are coming from, that simply providing an intervention that addresses a single behaviour often doesn't address the entire set of issues for a young person and get to the roots. Potentially there is a quite interesting model for the youth sector in saying, "Address the needs of the individual, but perhaps target toward geographic areas where there are significant inequalities of outcomes, rather than specific issue areas, and then measure perhaps two or three outcomes that would demonstrate real success."

  Q317 Neil Carmichael: This question about measurement is really important, isn't it? Are we thinking about the number of people who go through a door into a facility—which is one way of measuring—or the assessment of improvement in quality of life, and so on? We need to know what measuring system we are going to use and how effective it will be. Can you comment on that?

  Louise Savell: To a certain extent, I think that it largely depends on what the organisation or entity putting up the success payments is prepared to pay for. If the Government were sufficiently convinced that the number of heads coming through the door of a particular youth centre, or the number of individuals who were provided with a certain literacy course, was indicative of future benefit to the public sector, then arguably they would be prepared to pay for it. My guess is that they probably would not. They would probably be more likely to pay for reduced youth unemployment, improved school outcomes and reduced antisocial behaviour—areas where there are real, tangible links to public sector budgets that could potentially be cash. But it's up for discussion, I think.

  Q318 Neil Carmichael: The obvious problem is that a lot of the social impacts one would want to achieve involve stopping things happening, so let us examine that. On, for example, pregnancy, are we suggesting that people who are not pregnant by the time they are 18, let's say, pop in for a payment? It is a ridiculous concept put like that, but it relates to the issue of things not happening.

  Louise Savell: Absolutely. Demonstrating a counter-factual—that if you hadn't done something then there would have been a negative consequence—is the key challenge, I think.

  Q319 Chair: What recommendations would you make Louise? We take evidence and then write reports. We make recommendations, and the Government have to respond. So we are trying to not only have a greater understanding, but to then make recommendations on concrete actions that make better outcomes more likely. At least, we hope that that will happen.

  Louise Savell: There are a number of considerations when you think about outcome metrics in the youth space. The main one is what your baseline is going to be. You could look at a cohort baseline for that particular area, where I think there are particular challenges around the cuts that are happening, and question marks would have to be raised around whether a baseline based on historical precedent is really valid. Alternatively, you could look to benchmark against other geographic areas, which would have its own challenges. In Peterborough, we are matching every individual in our target cohort who is leaving prison with 10 other individuals, matched according to demographics and offending history from the police national computer. That is a very carefully linked one. Around teen pregnancy that gets harder, because they presumably have no history of getting pregnant.

  Q320 Neil Carmichael: The Ministry of Justice is going down that route, isn't it? That is slightly easier, because something has already happened—the person has been in prison, so the idea is to stop them going again. You know that you are dealing with somebody who has already had difficulties. Perhaps that needs to be factored in.

  Since we are short of time I shall move on to my next question, which is to Rob. What kind of criteria do you use for the allocation of your money, in the context of measurement, and so forth that I have been discussing with Louise?

  Rob Bell: We have very specific criteria. We are interested in organisations that work with the most marginalised. These are often the sort of young people with whom attempting to work to generate any sort of positive outcome is expensive and complicated. It is sometimes difficult for organisations to work with those young people with statutory money, because it's much more difficult and time-consuming to show outcomes. We work in that area of this overall picture. We are interested in organisations that try to innovate, to develop or transplant ideas and make them work successfully in practice. We work with organisations that are willing to develop some sort of metrics to show success. Crucially, we want to—

  Q321 Chair: You wouldn't invest unless they were committed to that, and you would always set out to show that—

  Rob Bell: We would. Where we started—where Martin and I slightly disagreed—is that I think organisations have an appetite to do that, but lack the capacity, skills and resources. Organisations such as the NPC help them with that. Funders can—and, increasingly, we will—compartmentalise grants so that parts of them are on research and evaluation, and often a bit on business development. We do as much as we can to help them understand—

  Q322 Chair: How much does that cost? One of the issues when you talk to people is that you want to lambast them for not coming forward with better evidence of the impact, but when you look at the mechanics of what they have to do in a small organisation, it looks terribly expensive in relation to what they're trying to do. Have you found ways of doing it cost-effectively and not too obtrusively?

  Rob Bell: We have developed some work which Martin might want to outline, but as a rule of thumb, we would always make sure there was some evaluation element within anything we fund, and we'd prefer it to be independent. We broadly follow a sort of civil service model, so it's around 5% or maybe up to 10%, depending on the case. We always make sure there's some resource to do this work.

  Q323 Neil Carmichael: So you're really keen to establish a dialogue, aren't you? That must help us to frame the ways in which you are measuring things, and it's going to be easy, too, to consider impact later.

  Rob Bell: Yes. The challenging thing as a funder with a cohort of grants—every organisation is in a similar position—is that what you end up with is a story that says a certain percentage of organisations achieve the outcomes we agreed and others fail, but they don't necessarily stack up to the same sorts of outcomes. There are different approaches to measuring change, and different types of measure.

  Martin Brookes: A calculation like that 10:1 social return on investment can be quite expensive and time-consuming. It usually costs tens of thousands of pounds to do a bespoke calculation like that for an organisation, which is prohibitively expensive for many organisations. The prize, I think, is to get to the point where there are off-the-shelf methods that a charity can just buy in cheaply. The thing that we've developed and rolled out with Rob's support is measuring well-being and different aspects of teenagers' happiness. That we can apply for about £300—

  Chair: We will come to that, I hope.

  Martin Brookes: Right. So proper social return on investment is an expensive, time-consuming and resource-intensive process. The original research on the social impact, or one of the inputs into that, cost, in cash terms, about £30,000. Had St Giles Trust had to pay for it, it would have cost them about £70,000. That's a lot of money up front to pay for suits and accountants.

  Q324 Neil Carmichael: The NPC has commented that results in the sector are hard to materialise and measure. Do you think that this is something that might distract or discourage people from getting involved in investing?

  Martin Brookes: It shouldn't do, and I think smart and intelligent funders, like the Paul Hamlyn Foundation, O2 and others get that. The results can take time to materialise, and there's a clear and interesting pattern about how results can dip after a few months of engagement with children before they really show a benefit. That's quite difficult to get your head around. I don't think it's particularly complicated for donors or investors—however they regard themselves—to understand, and I don't think it should be a factor that inhibits them. I think the lack of evidence—the inability to evidence what you do and say, "Here is how it is. It's a bit more complicated than a straight line, but there is evidence of it", rather than being able to say, "Instinctively, we know we're helping children"—is more of an inhibiting factor.

  Bill Eyres: With a larger social programme, such as that that we are running, our view has definitely been that if you are going to manage it effectively, you have to measure, so we work with Teesside University on a wide range of different measures.

  Q325 Chair: How much do you spend on that?

  Bill Eyres: We spend between 5% and 10% of our budget, which is in line with what Rob is saying. It is the right principle—we find that Teesside University provides very valuable feedback on how we can develop the programme to be more effective because they are constantly measuring it with young people. It is non-negotiable, and it is critical that you are measuring. I agree with Martin that you have to develop suitable mechanisms for charities with smaller budgets, but it is still a key principle that it has to be a non-negotiable part of your programme.

  Q326 Neil Carmichael: Do you think that the commitment from a charity or a trust is different from that of Government, in terms of funding and length of commitment? Why is that, if it is the case?

  Rob Bell: I guess that statutory funding has different imperatives behind it and different lines of accountability and a large part of that is around service delivery. We are not quite in the same space; at the Paul Hamlyn Foundation, we look at organisational integrity and viability and those sorts of things. In part, we support projects that we think are innovative and may lead to more sustainable funding streams, but we also help in a small way, sometimes through extra help, non-monetary assistance or bringing in external people to build capacity for the organisation to compete more effectively.

  Q327 Damian Hinds: I hope that one area we will focus on in the report of this inquiry will be about how you can fund things—the extent to which you can do payment by results and the extent to which you can use these new financial instruments, such as social impact bonds. I want to put a hypothesis to you, because I am sceptical whether it works in the area we are talking about. I wish it did, but I am worried that it just can't. I have scribbled down six challenges, the first four of which strike me as central to any payment-by-results scheme and a further two if you start introducing social impact bonds.

  The first is the difficulty in defining the audience, especially when people may drift in and out of it. The second is isolating the impact of any particular intervention that a service might do when lots of things are happening in these people's lives. The third is identifying a control group to compare that impact against. The fourth is having measures of success, particularly in the interim—we may be able to project that over a person's lifetime, although there are all sorts of effects, but what is the measure in a definable, realistic time frame? Those first four, I suggest, apply to any payment-by-results scheme and a further two seem to me to be added when you introduce social impact bonds. The first of those is the fact that savings come from many different budgets and there is a danger with that of double counting. Fourth is that—

  Chair: Sixth.

  Damian Hinds: I am so sorry—I got carried away. The sixth, or second, depending on which list we are counting on—and if you take one from the other, you will get fourth—is that savings are a cash flow over a very long time horizon, so even if savings are made, they may be made in 15 or 20 years' time, when there has been two or three changes of Government. I realise that this does not follow the pattern of what we would normally count as a question to the panel, but I wanted to put that analysis. Are the big challenges more or less right? Does that analysis suggest that, in something such as youth work, you are at the extreme end of challenging in making payment by results and, particularly, social impact bonds work?

  Chair: Does that analysis prompt the question that it shouldn't be at the youth work level that you have payment by results, but somewhere further up—the local authority might have a payment-by-results model and within that, in order to deliver a broader range of indicators, they have confidence, they have metrics, but they will invest because they think it will help them deliver? That is my way of answering that, instead of letting you do it.

  Louise Savell: Yes; I think that you are absolutely right. My instinct is that if payment by results is going to work in this sector, it would be by funding a number of different interventions and organisations and bringing those organisations together to deliver impact at a wider area than the audience that one particular service may be reaching. You have probably identified the six main challenges. To be honest, the control group issue can probably be worked around by using cohorts and finding comparator areas. I think that the measures of success are probably interim measures of success, which would be linked to current and future value to the public sector.

  Q328 Damian Hinds: Are there reliable or at least reasonably reliable predictors? Let us take an extreme case. You have a sort of ne'er-do-well, who eventually will turn into a loving father, holding down a job, contributing greatly to society and all the rest of it. In an ideal world, you can spot something at the age of 16 that predicts that. I realise that you will never get to that extreme. But how good are those interim measures? Or what are they?

  Chair: We don't have time for that. We'll have to stick to the issue.

  Louise Savell: Maybe we can talk offline about that.

  The bigger question is who pays from the public sector? And then there is the cash-flow issue. You are absolutely right. For a social impact bond model, that is a real question and it links to the measures of success, because what you might be saying is that an interim metric is needed as the trigger for payment, in order to bring investors in within a reasonable time frame, but the public sector will have to take a view as to whether it is confident enough about future cash flows to pay on that basis.

  Rob Bell: Can I add a comment about this social impact bond? Young people have holistic needs, which you have heard about. Those needs vary over time, and they are interrelated. I think that these bonds are very useful in some respects, and if they are effective they ought to generate more cash for organisations to do the work that they are doing. However, there is a real danger that you see the bond as a disciplinary tool, so it enhances the performances of organisations that are not performing effectively enough at the moment. It's not necessarily the case that that follows on, because all sorts of different types of funding help organisations to do what they do very well. A social impact bond, by its very nature, does not necessarily make an organisation transform its work to be more effective.

  Lots of our grantees recognise that they do some things particularly well. They help young people in some aspects of their lives very well, and they would like to be able to focus on that work and partner up more with other organisations in their local area, so that young people get a better service as they move between different types of specialist support. That can be done through more enlightened funding or by loosening up funding strictures to allow organisations to practise in that way. Many of them talk about it as "network delivery".

  Damian Hinds: I think that politicians quite often get excited—I get excited—about the potential of social impact bonds, where we think they can work. I am not so excited about them in terms of forcing improvement, although it is a great thing if they can do that as well, but more in terms of the reallocation of funding. That means that you have, somewhat away from the politics, a group of very bright people deciding where social finance is best invested, going after those things that deliver the best returns. That is actually very interesting.

  Chair: This is going to make a great seminar.

  Damian Hinds: I am so sorry, Chair. I will stop now.

  Q329 Tessa Munt: I just want to clarify something. Rob, you were talking about the 5% check, which I absolutely understand. That is a drill-down exercise to check thoroughly that everything is working in the way that you thought it would. You said something different, that it was 5% of your expenditure—or whatever—that probably went on evaluation. What percentage of activity does that interrogate?

  Bill Eyres: That covers all the young people who go through the programme.

  Q330 Tessa Munt: Do you evaluate everything in depth?

  Bill Eyres: Yes. It includes a range of different things. So there are quantitative measures on the projects and there is the number of young people involved. However, there is also more qualitative stuff about where the young people were in terms of confidence and skills at the beginning of the project, and where they ended up. In addition, we measure community impact and we look at the impact for our O2 volunteers, who are a part of the scheme. It is quite an intense process.

  Q331 Chair: We are obviously interested in the measurement, in order that the case can be made. We would be very grateful if you could produce a short note on what you do and how you do it. That obviously goes for you too, Louise. Thank you.

  Q332 Pat Glass: Louise, has the investment in the first bonds come from corporate sources or charitable sources?

  Louise Savell: For investment in the social impact bond, we had 17 investors. They were a mix of individuals of high net worth, and charitable trusts and foundations, of which—

  Pat Glass: Sorry. Could you say that again? You went very quickly.

  Louise Savell: Sorry. There was a mix of individuals of high net worth—

  Martin Brookes: Rich people.

  Louise Savell: Rich people, yes—I was trying to avoid that—and charitable trusts and foundations.

  Q333 Pat Glass: The balance within those 17 investors?

  Louise Savell: The balance is towards charitable trusts and foundations.

  Pat Glass: A couple of rich people and a lot of charities.

  Louise Savell: Four or five, and then some charitable trusts and foundations, of which, I should say, the Paul Hamlyn Foundation is one.

  Rob Bell: A junior partner.

  Q334 Pat Glass: Very briefly, Rob and Martin, can you explain to me the well-being index that you are developing? Would it be useful in something like youth services, and how is it different from what is already out there?

  Rob Bell: Martin is the best technician around this. I can say why we're interested in it and why we've tried to help.

  Martin Brookes: To preface it, one of the things about payment by results and social impact bonds that I am uneasy about is that they basically value things that you can put a monetary value on. There are lots of aspects of a child's life that are about self-esteem, well-being and resilience, and that don't necessarily deliver a financial value or saving to the public purse, but are things that we want to improve for children.

  We spent more than two years developing a simple, off-the-shelf tool that charities and schools can use to assess and track the different aspects of a child's well-being. It has been piloted with charities such as Barnardo's, and a whole bunch of schools. It looks at things such as resilience, self-esteem, and so on, in a very rigorous and robust way that is also very practicable for organisations to do. It is now going online with support from the Paul Hamlyn Foundation. We are going to roll this out across whoever wants it, basically.

  We think it addresses very clearly the problem of how expensive it can be for organisations to invest in evaluation and measurement. It provides a method that can be used and applied consistently across organisations, so you could do comparisons. I would say that it is very relevant to the sector, and lots of charities that we have worked with in developing it are in that field. It was very expensive to develop though, but the marginal cost to then roll it out is tiny.

  Q335 Chair: Can you spell out a little bit more about the substance of it?

  Martin Brookes: It is literally a series of questions that takes a bunch of scales that have been used and developed by psychologists and psychiatrists over the years, which are all very academically rigorous, and distils them into a 10 to 15-minute questionnaire for children to answer. It is about how they feel about different things—their friends, families, themselves, their sense of self-worth, and so on. It has now been road-tested with thousands of children to check that it is robust and works. We ran focus groups on language and so on, so it is a very good, solid, reliable and robust tool, because we were able to put a lot of investment into it up front.

  The return from that is that we can roll it out and get charities, youth groups and others to use it, and to take a temperature check on whether they are really helping children. For example, a charity that takes children on an Outward Bound course can work out whether it is really having an impact. That is a fairly light-touch intervention. A charity that works in depth with children over many months, with youth workers, can also work out whether it is helping, and they can compare themselves across organisations too. That is quite an important thing to do.

  Q336 Pat Glass: It's online now?

  Martin Brookes: It's online in a sort of hidden location at the moment. I would be very happy to send you some more information about it. There are charities using it now, and we are starting to talk to others who may then take it on. We'll roll it out much more widely later this year with the support of the Paul Hamlyn Foundation, and others who invest in us.

  Q337 Pat Glass: My background is in education, and for years I have worked with people who have said, "You cannot possibly measure the cost of our intervention." How will you get things like the youth and education services, who are not keen on outcomes-based measures, to pick this up and use it?

  Martin Brookes: I think we will say to them that it has been developed with teachers, schools and charities. It has input from them, and children themselves. It is very academically rigorous. You may object to outcomes-based stuff because it distorts what you do, or because it only values things you can put a monetary value on. However, if you care about tracking the self-esteem of your children and whether you are improving their resilience, whether their sense of their relationships with their family and community are improving—

  Chair: Every loving parent should be applying your well-being test, and the more regularly they do it the more loving they are.

  Martin Brookes: For various technical reasons it is not really applicable to individual children. You have to group children to get meaningful results. Every teacher, every head teacher or every charity working with children who cares about those aspects—

  Q338 Chair: The Prime Minister has often talked about general well-being as opposed to national wealth as being of value. Should we have that in the league tables? There is the English Bac and every other faddish new measure of the Government, but should we also have the well-being of the children?

  Martin Brookes: One of the things that Ofsted is supposed to assess schools on is well-being. If you look at the way it does that, it is more about child protection than genuinely about well-being. Child protection is important, but there is a whole aspect about the well-being of the school. Charities that use it in schools as well as schools themselves say that it gives them useful data on how well they are doing.

  Q339 Chair: All too often people talk about childhood and young people purely in instrumental terms about what they will do later. It is today that counts.

  Martin Brookes: This asks they how they feel in a proper way.

  Q340 Pat Glass: Would this tool identify for Ofsted or for parents a school that is seemingly high achieving but which has an almost endemic bullying culture from the staff to the children?

  Martin Brookes: Yes, and we have used it directly with charities that address bullying.

  Q341 Pat Glass: Send me the details please.

  Martin Brookes: We have applied it in one school where it was pretty clear that the children had good self esteem, it was a really good school and the charity did not need to be there so it pulled out.

  Rob Bell: It has a diagnostic function so it lets organisations look more closely at where there may be something working well. Then there is another task which is to go in and explore more closely and how they respond to that is key.

  Chair: Thank you very much. Because I am too indulgent I will give Damian one last question.

  Q342 Damian Hinds: The tool sounds very interesting and useful. May I ask two quick questions about it? First, what is its academic provenance and has it been peer reviewed, tested and kicked around internationally as well as in this country? Secondly, why has nobody else mentioned it to us?

  Martin Brookes: I cannot answer the latter question. It has had an academic panel and steering group assess it. It has been rigorously peer reviewed. All of the questions come from existing measures. That is a crucial part of this. It distils all the very well developed academic measures that are difficult to apply in a school setting or a charity and tests whether you are taking enough elements of each to get sensible answers. There has been about £100,000 of development work and two to three years in development. I don't know why no one has mentioned it to you. Perhaps it is because we are deliberately not marketing it. This is the first time that we are talking about it fairly publicly, but people like Rob and others know about it.

  Rob Bell: At some point we and other funders would like to be able to say, "We would like you to use this tool if it is helpful to you", and they may use it alongside other measures around more material outcomes. We would like to be able to offer that and we think it offers good value and could become self-financing.

  Martin Brookes: If you want, I am happy to do you a brief note on it.

  Q343 Chair: Thank you very much indeed. Thank you all for giving us evidence this morning. It has been most useful.

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