Janette Powell
Programme Director
Social Finance
Social Finance

Reconnections – how a social impact bond helps reduce loneliness in the UK

The case study below is an example of how social impact bonds can be used to finance services that help improve health and wellbeing, such as Reconnections. For more information about this method, read social impact financing.

Reconnections is a personalised service that aims to reduce loneliness and social isolation in Worcestershire. There, up to 35,000 older people may experience loneliness and around 11,000 of those may suffer from chronic loneliness. Commissioners from the health system, local authority adult social care and public health came together in 2014 and agreed that the relationship between loneliness, health and service use provided a rationale for expanding services to address loneliness.

Beginning delivery in August 2015, Reconnections is the world’s first social impact bond to tackle loneliness. Funded through a social impact bond contract, socially motivated investors fund the service up front and the health service and local government only pay if and when the outcome of reduced loneliness is achieved. This outcomes-based contract and the availability of flexible investment has stimulated and enabled significant service adaptation.

Reconnections is the UK’s leading services providing personalised support to older people to overcome chronic loneliness. It is a service that takes a very tailored approach, with a volunteer or case worker supporting the person for over 6-9 months to re-engage with interests and social relationships of their choice and overcome practical and emotional barriers. Since its launch in 2015, over 1,300 older people have been supported. On average, self-reported loneliness is significantly lower at 9 months and 18 months after entering the service; people report an average reduction of -1.4pts at 9 months and -0.9pts at 18 months on the UCLA 4 questions loneliness scale (compared to an expected -0.8pts reduction). Early evaluations by the London School of Economics are also positive, and the service has been held up as an exemplar by national policy makers on loneliness.

The rationale for establishing the Reconnections service is to combat the growing health concerns of loneliness in older age. Loneliness is increasingly being shown to have significant impacts on health, wellbeing and communities. A meta-analysis in 2015 found that those who were identified as chronically lonely had a considerably higher risk of mortality. To reduce pressure on overall health and social care budgets, commissioners have been focusing on reducing the growth in non-elective admissions. There is a strong hypothesis that reducing loneliness will achieve such an impact in the short and long term.

As a new intervention, commissioners were keen to transfer some of the delivery risks in developing the programme, and keen to stimulate innovation and adaption. Consequently, they were attracted by a social impact bond mechanism, under which investors fund the service up front and commissioners only pay if outcomes are achieved. They considered that this would share financial risk and introduce greater rigour in delivery. Central government provided some of the outcomes funding in recognition of the innovation. The share of outcome payments for commissioners reflected the likely benefits to different commissioners – for example, health commissioners making a greater proportion of the payments 18 months after starting the service once some health savings are predicted to have accrued.

The service and investment model was developed by a social investment intermediary, Social Finance, and a local older people’s charity – Age UK Herefordshire and Worcestershire. Having reviewed international evidence and local experience, they concluded that a personalised approach to addressing loneliness would be most effective; responding to older people’s particular interests and barriers to reconnecting with others rather than putting on general activities.

Social Finance brought together a small number of investors to cover the up-front costs, led by NESTA Impact Investments (the investment arm of NESTA, national charity focused on promoting innovation) with capital worth £650,000 (c.EU750,000). This reflected NESTA’s strategic interest in innovation to address the needs of an ageing population. As seeking to address loneliness at scale required service development and innovation, Social Finance also raised c.£400,000 (c.EU460,000) of grant funding in order to help cover initial service design, mobilisation and evaluation and learning. This was raised from a combination of the CalousteGulbenkian Foundation, who have been a strategic funder of approaches to understand and address loneliness, and a NESTA led grant fund.

Reconnections is financed using a Social Impact Bond and is the first service in the world using this financial mechanism to tackle loneliness. Social impact bonds are outcome-based contracts and involve a socially-motivated investor providing up-front funding for a service that will have a positive social impact. This social impact often aligns with a similarly positive financial impact for commissioners.

In the case of Reconnections, the social impact being sought is a reduction in loneliness. Investors receive outcome payments for each aggregate reduction in self-reported loneliness using the UCLA self-reported loneliness question (a 12-point scale).

The payment metrics are:

  • £740 (c.EU850) per point reduction after 9 months after service start
  • £240 per (c.EU275) (sustained) point reduction 18 months after service start.

These outcome ‘tariffs’ were set due to growing evidence on the relationship between loneliness and poor physical and mental health, and consequent healthcare and social care usage. A London School of Economics interim evaluation found that reducing loneliness in people who feel lonely most of the time could potentially save up to £6,000 per person in costs to the system over 10 years.

The tariff takes into account that this £6,000 would involve a multiple point reduction and needs to be discounted for impact over ten years and likely reduction in impact over time. The initial modelling suggests a correlation with lower A&E attendances and GP appointments in the short term and potential longer-term reductions as a consequence of reduced risks of dementia, depression and health conditions associated with low mobility (e.g. stroke). Particularly of relevance to the council was the impact of reducing loneliness on possibly delaying/reducing the need for social care in elderly patients.

The service costs approximately £330,000 (EU380,000) each year to support up to 430 older people a year (c. £750-800 per participant). At the start of the service, investors provided £650,000 in up-front capital – £565,000 as debt and £85,000 as equity. In the first two years of running the service was loss making – however, as impact has grown, and 18 months payments have increased, the service is now making a small surplus.

Reconnections is led by a project manager, currently supported by a programme director, who has project oversight and is responsible for team management. They are also responsible for most of the marketing and local partnership building. Employed by the delivery partners, caseworkers oversee a specific geographical patch.

Caseworkers are responsible for client assessments and personal planning with clients. They will also have sole responsibility for a small number of clients who cannot receive volunteer support due to their being too complex or living in a remote area. This is a change to the original model which was more volunteer heavy and was a response to clients having more complex needs than initially anticipated. Many of these caseworkers have a history of working as assessors, or support workers, and therefore are capable of dealing with often quite difficult conversations.

Employed by the central team, the volunteer co-ordinator is responsible for matching clients to volunteers and building a peer support network between the volunteers. Given the flexibility and responsiveness of the service to client needs and wishes, there is ample support available for volunteers to ensure they are equipped to do their role well and have a sounding board.

The Reconnections service is heavily reliant on volunteers who are matched with clients and who support them to reconnect with society. As mentioned, volunteers are supported by the central team and are not placed with the more complex patients referred to the service.