Cost benefit modelling for
working with
troubled families
Mark Tuckett:
Lovedeep Vaid:
Sheffield City Council
Centre for Economic and
Social Inclusion
Aims for today’s session
• Explain what are we trying to do in Sheffield and
why: build upon existing models and explain how
ours will be different
• Demonstrate where the work has got to so far
What are we doing and why
• We have agreed a Successful Families plan, for
improving how we work with those families in need
of extra help and support.
• We are writing a business case for improving how
we work with these families
• We therefore need a set of Sheffield-specific costs
and benefits, which we can all recognise and sign up
to, to generate a business case for sustainable
funding in the future
We want to understand the profile
of costs and benefits over time
Financial
benefit/(cost)
1
2
3
4
5
Year
Financial
benefit/(cost)
G
F
E
D
1
2
3
4
C
5
Year
B
A
How are we proposing to do this
• We are not starting from scratch – we are building
on existing models, including those developed by
DFE and Greater Manchester
• We are incorporating other relevant examples, e.g.,
Loughborough University’s cost work about Looked
After Children, CAADA’s work about domestic abuse
How will our model be different
• Incorporate Sheffield-specific costs and benefits wherever possible
• Use a robust, consistent, transparent approach to calculating costs (e.g.,
treatment of ‘on-costs’)
• Clearly separate cashable and non-cashable benefits – for example, the
costs of taking a child into care
• Include the family as a potential beneficiary (e.g., ability to save money)
• Increase the emphasis on the cost of intervention/provision of services,
including cost of Multi-Agency approaches
• Calculate costs and benefits over more than one year
• Provide the functionality to compare the impact of different (or no)
intervention(s)
Which agencies are we already
involving in this discussion
• Police
• Probation
• Early Intervention and
Prevention
• CYPF – Business Strategy
• Communities – Business
Strategy and Commissioning
• Adult Safeguarding
• Children’s Safeguarding
• YOS
• Drugs and Alcohol Abuse
Partnership
• Domestic Abuse Partnership
• Health and Social Care Trust
•
•
•
•
•
•
•
PCT
Housing Solutions
Employment Services
DWP
Safer Neighbourhoods
Policy, Partnership and Research
VCF sector (via 3rd Sector
Assembly and themed groups)
• CAMHS
• Prison service
For each agency, we are identifying
people with a working knowledge of
the finances and outcomes for each
area
An evidence based model
• DfE Family Savings Calculator: help local authorities to quantify the cost
saved by services and agencies from a family at risk undergoing and
completing an intervention
• Manchester evaluation framework: help demonstrate which ways of
working are most effective
• Both based on research that helps identify associated costs and benefits
• Help agencies to identify the financial value of positive outcomes
• Identify those programmes which do not deliver value for money for the
taxpayer and reallocate resources accordingly
• Help to ensure that future programmes are designed with a clear
understanding of the costs and benefits they will deliver to the taxpayer
• Save money in the short term
• Longer-term: drive economic growth, by focusing resources on those
programmes which are proven to deliver social and economic opportunity
Meaningful evaluation requires accurate cost calculations
Need to calculate two cost figures:
• cost of delivering services without any intervention (the reference case)
• cost of the intervention
Initial intervention cost figures will be an estimate
Some cannot be accurately forecast
The model sums three different types of costs:
• Capital costs
• Revenue costs
• In-kind costs
The reference case (risk costs) =
existing business as usual approach to dealing with issues
Manchester developed a framework to enable a break down, calculate
and report the costs that the public purse has been incurring:
• Contact and engagement
• Assessment
• Interventions
• Reviewing
For each of these stages:
• List the agencies who currently incur costs;
• Against each agency, list the types of costs they incur and split total costs
into revenue, capital and in-kind costs
Build a bottom-up model of intervention case costs to be measured
against the reference cost = net cost of an intervention
Examples of outcomes ……..
• Found employment
• FT/PT, sustained employment, benefits
• Increased skills and education level
• Step up in educational level
• Helped parents and children
• Increased parental work readiness
• Improved school readiness
• Reduced parental mental health
• Reduced numbers of children in care
• Reduced crime
Types of benefits
Model seeks to place a value on three different types of benefits
• Fiscal benefits
• Economic benefits
• Social benefits
There are two outputs from the model:
• Benefit cost ratios
• Net present efficiencies
Challenges
Deadweight
The change in outcomes that would have happened anyway is known as the
deadweight. Calculated in two ways:
• assessing the change in outcome measures of comparator areas
• measuring changes in outcomes of individuals engaged in the pilot through
a robust monitoring and evaluation plan
Optimism bias (OB)
Practitioners are overly optimistic about the outcomes
To account for this the model needs to apply correction factors
Different interventions require different cost, risk, outcome headings ….
Can one model fit all ???