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Thursday 30 March 2017
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Sussex IOM Evaluation - Break Even Analysis

Version: KR/RF/5/1.0

Authors: Hallam Centre for Community Justice

March 2012

A Break-even Analysis of the delivery of Integrated Offender Management in Sussex

 

 

Introduction

This report presents the results of a break-even analysis of the IOM delivery in Sussex. The aim of a break-even analysis is to consider the costs of delivery of an intervention, and the impacts that might be produced as a result. By estimating economic values for the impacts that might be achieved, a break-even point can be identified. This is the minimum level of impact that needs to be achieved, in order to allow the intervention to cover the costs of implementation. In this break-even analysis, we are exclusively focussing on the reduction in reconvictions as the impacts that will be considered.

 

 

Scope of the Analysis

A key consideration in the analysis is to precisely delineate the scope of the analysis: what costs, inputs, processes and outcomes are to be considered relevant, and which should be excluded for these purposes. Through consultation with the strategic leads of IOM in Sussex, the following was agreed:

  • Additional costs incurred as a result of IOM by police and probation services in the five project sites;

  • Costs incurred are those identified during the first 12 months of IOM being operational. This date was identified as the 1 st October 2010;

  • Fixed costs of setting up the scheme in the different project areas were recorded, and are reported here, but are not included in the break-even analysis, which focuses exclusively on the costs of running the IOM programmes;

  • Impacts considered are exclusively the reduction in costs that could be produced in terms of reducing re-convictions. Other outcomes may be produced but are not considered here.     

  • The cohort of offenders under consideration are those who were actively being managed under IOM.

 

 

Additionality

A key aspect of carrying out the analysis was to clearly delineate the additional aspects of delivery that we were focussing on. Clearly, the costs of delivering IOM from “scratch” are inappropriate: the IOM delivery built on many pre-existing processes, staffing and interventions, not least the police, probation and voluntary agencies that all pre-dated the development of the model.  In scoping the project, the critical aspect is to achieve clarity in identify the additional aspects of the intervention.

 

 

Identification of Implementation Costs

The costs of implementation were identified through a four stage process:

  1. an assessment of the additionality drawn from literature and project reports provided by the central IOM strategic leads, and each of the areas

  2. telephone interviews with the strategic leads of probation and the police in each of the project areas;

  3. a clear, agreed statement of what constituted additional activity due to the implementation of IOM in the different project areas;

  4. the completion of a costing spreadsheet by each project area, which provided staffing and estimates of time taken for different activities and processes, which in turn could be used to estimate changed costs incurred.

 

The costs identified were as follows, as broken down by project area, and type of additional activity. Costs are reported in more detailed in Appendix A.

 

 

 

Brighton

Eastbourne and Hastings

Worthing

Crawley

Chichester

Additional Staffing

136786.30

125561.00

79406.11

120652.54

69049.46

Additional Processes

0

-1263.85

1932.12

5066.43

2649.06

Fixed Setup Costs[1]

500

2093.63

0

0

0

Total Running Costs

136786.30

124297.15

81338.23

125718.97

71698.52

 

 

It should be noted that with the additional processes in Eastbourne and Hastings, additional costs can be negative: that is to say that the changes brought about by IOM can save money. The next table presents the figures for savings resulting from IOM in Eastbourne (which are included in the totals in the table above), and what changes produced them. These savings are not necessarily cashable, but they do represent an opportunity cost saving: for police and probation staff to not have to attend for 18 fewer hours of case conferencing per annum does not reduce the salary costs paid by their agencies, but do represent a time saving, allowing other tasks to be carried out instead.

 

 

 

Change producing reduction in Cost

Reduction

Eastbourne and Hastings

0.8 Probation Service Officer from Oct 10 to Oct 11

18646

 

18 hours per annum attending  case conferences for 1 police inspector, 1 senior probation officer, 2 probation officers and 2 probation service officers,

1263.85

 

 

 

 

Throughput

The break-even analysis focuses on the cohort identified as of the end of September 2010, who are being actively managed with the IOM teams. It does not include those individuals who have been identified as suitable for IOM, but are yet to be actively managed. The throughput figures are as follows:

 

 

Area

Statutory

Non-Statutory

Total

Brighton

212

19

231

East Sussex

352

30

382

West Sussex

236

40

276

 

 

 

Break Even Analysis Methodology

The aim of a break even analysis is to identify the outcomes required to cover the costs incurred by IOM. The key considerations in the model are:

  • the additional costs incurred in delivering the IOM project: these have been identified by the four-stage process identified above ;

  • the costs incurred as a result of possible re-offending: these are taken from pre-existing estimates of the unit costs of crime to the probation and court services;

  • the length of time an offender spends on IOM;

  • the costs incurred by the counterfactual situation: namely, standard probation for statutory offenders, and no offender management for non-statutory offenders. These costs incorporate delivery costs and costs incurred as a result of possible re-offending: these are taken from pre-existing estimates of the costs of delivery, and the risks of re-offending following stand-alone probation services.

 

The key outcome is the rate of re-offending: the break-even point will be expressed in terms of the rate of re-offending that needs to be achieved by the IOM cohort in order to justify the expenditure incurred by IOM.

 

 

Costs incurred by IOM – Additional Cost per offender day 

The additional costs incurred by IOM are presented below, in total, and in per offender day delivered.

 

 

Area

Total Cost

Offender days delivered Oct10-Sep11

Costs per offender day delivered

Brighton

£136786·30

38170

£3.58

East Sussex

£125561·00

70717

£1.78

West Sussex

£278755.69

49805

£5.60

 

 

An ‘offender day’ is assumed to be a day between the date an offender is registered on IOM, and the date of completion of IOM. Within the data provided, there are 4 possible outcomes for individuals on the  IOM cohort:

  • “Successful completers”: by agreement the individual has fully engaged with IOM, and has achieved the agreed outcomes;

  • “Re-offenders”: individuals removed from IOM due to subsequent re-offending, which has resulted in either a custodial or a different community sentence. This group will incur additional costs to the criminal justice system, and these costs need to be taken into account in determining the break-even point.;

  • “Exited Other” : this is a combination of offenders exiting IOM  due to moving away from the area, the offender dying, earlier offending resulting in an offender being moved to a different sentence, or disengagement by the offender prior to, or immediately after the first meeting;

  • “Not Out”: this is an issue relating to the data. The dataset contains individuals who have been enrolled at different time points, through to the end of the tracking period.  Many have reached the end of the time period covered by IOM, but are still engaged on the IOM programme – we have termed these the ‘Not Out’ group.

 

This final group is somewhat problematic, as we cannot unambiguously say how long the longest time an offender is managed by IOM is. Due to the inevitable censoring of the data, we are assuming that 18 months on IOM represents the longest time period on IOM.

 

In order to calculate the total costs of IOM, we have calculated the likelihood, over an 18 month period, of remaining on IOM for the entire period, of re-offending and thus completing IOM, and having successfully completed IOM. These probabilities are as follows:

 

 

Area

Still on

Exit Reoffended

Completed

Brighton

56.70%

31.39%

11.91%

East Sussex

28.61%

12.37%

59.02%

West Sussex

60.92%

13.46%

25.62%

 

 

By using these figures, we can calculate a total cost of delivery of IOM per offender start as follows:

 

 

Area

Cost of Delivery of IOM per offender start

Brighton

£1536.78

East Sussex

£627.52

West Sussex

£2468.61

 

 

 

Costs of Re-offending

Costs of Reoffending are calculated by the unit costs of crime, as produced by existing Home Office research[2], adjusting to 2010 prices, and producing a weighted average, according to the distribution of offences recorded as having been subsequently committed by the IOM cohort. This produces a weighted average figure of £5452.92 per offence: these represent costs incurred by the probation service and the courts[3].

 

Total Costs of IOM per offender start are then calculated thus:

 

Costs of IOM = (Cost per day) x (Length of time on IOM) + (Likelihood of Re-offending)x (Cost of Re-offending)

 

For the different areas, the costs are as follows:

 

 

Area

Cost of Delivery of IOM

Probability of Reoffending

(12 months)

Weighted Average Cost of Offence

Expected cost of Re-offending

Total Cost per offender start

Brighton

£1536.78

21.07%

£5452.92

£1148.93

£2685.71

East

£627.52

8.93

£5452.92

£486.95

£1114.47

West

£2468.61

9.72

£5452.92

£530.02

£2998.79

 

 

 

Calculation of the Break Even Point

The break even point is the calculation of the rate of re-offending that would need to be achieved, in order for the costs of IOM to be covered. In other words, the question we are asking is ‘What reduction in future re-offending does IOM need to produce in order to produce savings, and thereby justify the expenditure on delivering IOM?’.

 

In order to do this, we have to calculate the expected career costs of offending of both the IOM cohort, and the counterfactual situation. The counterfactual situation can be taken to be the situation that would have been in place, had IOM not been implemented. In order to do this, we are using figures that have been approved by the Home Office in relation to another evaluation, of re-offending rates for a similar IOM cohort. The re-offending rate for a twelve month period for this cohort was 59.9%.

 

Using the Grove Mcleod model[4], we can estimate the career costs of offending for the counterfactual cohort with a known risk of re-offending over a twelve month period. We can then compare this figure with a range of potential re-offending rates for the Sussex IOM cohort, and identify what risks of re-offending in the 12 months following allocation to IOM will produce the break-even point. The figures produced are as follows:

 

 

Area

Break Even Point

Additional reduction in re-offending required

Brighton

59.0%

0.9%

East

59.6%

0.3%

West

58.9%

0.8%

 

 

 

The Next Stages

The next stages in the economic analysis of IOM is to move beyond a break-even analysis, which provides an indication of what impact would need to be achieved, on to a cost-benefit analysis, which compares costs with actually achieved reductions in re-offending. In order to do that, we will be receiving and analysing data from the Police National Computer, in order to produce empirically grounded figures for reductions in re-offending following allocation to IOM. The analysis will adopt a ‘before and after’ model to assess reductions, assessing changes in offending amongst the IOM cohort between the period before allocation, and that after.


Appendix A: Detailed Costs Break-down

 

Brighton Eastbourne and Hastings  
      Costs til Sept 11       Costs til Sept 11
               
Operational Start Date Oct-10     Operational Start Date Oct-10    
               
Staffing       Staffing      
1 Police Sergeant 51361 Jan11 38520.75 1 Police Sergeant 30816 Oct10 30816
1 PC (HALF TIME) 20291.5 Apr10 20291.5 Probation Admin 23308 Oct10 23308
1 co-located worker in relation to Inspire case management 20000 Apr10 30000 Reduced 0.8 Probation Service Officer -18646 Oct10 -18646
1 PSO (Through the Gate) 31956 Apr10 47934 1 Police Sergeant 51361 Oct10 51361
        1 Probation Officer 39671 Oct10 39671
Processes       Processes      
               
        Reduced Police Time      
        2xPCx -18hours (reduction in time)     -355.86
        1xinspector     -593.1
               
        Reduced Probation Time      
        Senior Probation Office x1     -510.3
        Probation Officer x2     -441.18
        Probation Service Officer x2     -380.52
               
        70mins a month x 1PC + 1PO + 1 SPO     1017.11052

 

 

 

 

Worthing Crawley Chichester
  Costs til Sept 11   Costs til Sept 11   Costs til Sept 11
           
Operational Start Date   Operational Start Date   Operational Start Date  
           
Staffing   Staffing   Staffing  
1 Police Officer 36464.58 1 Police Officer 36464.58 1 Police Officer from Aug 11 48285
0.6 x Probation Officer 27120.966     0.6 Probation Officer from May 11 4520.161
0.8 x Probation Officer 15067.2033 Probation Officer 45201.61 PSO 16244.3
0.2 Probation Officer 753.360167 PSO 38986.32    
  79406.1095   120652.51    
Processes   Processes   Processes  
Additional Time   Additional Time per annum   Additional Time per annum  
18 hours for 2 P.O.s, 2 PSO's and 1 CA p.a. 1932.12 Multi-agency case conference (hours p.a.) 3113.28 Multi-agency case conference (hours p.a.) 2649.06
    Sgt, DI, SPO, 3xPO, 2xPSO   Sgt, DI, 2 Police Officers, 2 Probation Officers  
           
    Weekly Tasking      
    3xPOs; 3xPSOs 1659.03    
           
    Selection for non-stat women      
    1 PO 294.12    
    1 hour per month 5066.43    
           
Fixed Costs   Fixed Costs   Fixed Costs  

 

Endnotes 

[1] Fixed setup costs are included here, but not included in the break-even analysis

 

[2] “Revisions made to the multipliers and unit costs of crime used in the Integrated Offender Management Value for Money Toolkit”, Home Office, September 2011

 

[3] A different range of costs could be considered, including costs to the victim, to other public sector agencies such as the health service, or costs to wider society: the decision to focus on costs to these agencies represents a conservative estimate of costs, and therefore savings accruing from a reduction in re-offending.

 

[4] Kevin A – can you provide a reference here