The Cost/Benefit Argument
The Cost/Benefit Argument
There is a growing consensus that the commissioning of high quality, outcome-focused supported employment can bring significant financial savings to local authorities and health trusts as well as to the exchequer.
There have been three cost/benefit studies carried out; Kent, Gloucestershire and one in North Lanarkshire. In addition, Pure Innovations have also undertaken some comparisons of the cost of securing sustainable employment compared to the cost of day services.
In Gloucestershire, four alternative costs:benefits outcomes are presented along with the criteria applied for each. When the most conservative calculation was applied, LA costs in the situation with GES (which combines the costs of directly funding GES with the in-work service costs to the LA) were £554,353 pa. This compared to £648,108 pa., calculated in avoidance costs based on an average cost to the LA for out of work band D service users. This produced a net balance of savings to the LA of £93,755 pa, returning £1.17 to the LA for every £1 it spends on the service.
The study from Kent is continuing and looks likely to identify even greater savings than originally identified. Whilst there are some caveats on some of the data used, early indications point to average annual savings of £1290 to the council and over £3500 to the taxpayer for every person in work. The study considered changes to welfare benefit entitlements, the cost of services received and tax and national insurance payments before and after employment.
The study suggests opportunities for achieving greater savings by:
* obtaining more full time jobs for those not in receipt of day services and/or are unknown to social services;
* developing a greater focus on those who are dependant on local day services prior to obtaining a job;
* increasing the resources allocated to support people with mental health problems.
The Kent study, undertaken by Dr Mark Kilsby and Dr Steve Beyer, has a further two phases that will refine the data used and it is hoped that this may allow a ‘cost per hour’ per person comparison to be made. It would also allow a more accurate calculation of the likely savings that would accrue due to reduced service usage, and determine more fully the cost implications of ‘crossover’, whereby some employees continue to use local services while in supported employment.
Many local authorities are reviewing their provision of supported employment services as potential savings need to be found. It is hoped that these studies will flag up the potential savings to be made by redirecting day service resources towards the provision of supported employment services.