The UK’s first social impact bond has met initial targets for reducing reoffending among offenders released from Peterborough Prison, according to results published today by the Ministry of Justice.
But the results show it has not yet delivered strong enough results to trigger a payment to investors.
The project reduced reoffending by 8.4 per cent among the first cohort of 1,000 prisoners it worked with, compared with a control group. There were 142 reconvictions per 100 offenders, compared to 155 reconvictions among a control group.
The Peterborough project was launched in 2010. It was the first example of the SIB, a type of payment-by-results contract where investors provide a not-for-profit organisation with capital to carry out interventions. The government pays out if the interventions are successful. The investors make a profit if the project works, and lose money if it does not.
The project was carried out by the One Service, a special purpose vehicle set up by Social Finance, the organisation which created social impact bonds. The project received £5m in commitments from 17 charitable foundations, and those investors will receive payments if all cohorts show at least a 7.5 per cent reduction in reoffending.
If the project continues to provide reductions at the current rate, it will trigger a payment for investors in 2016. If it had reduced reoffending by 10 per cent, this would have triggered an immediate payment.
David Hutchison, chief executive of Social Finance, said he expected to see improved performances in the second cohort.
“We’re anticipating a greater reduction based on what we’ve seen,” he said. “It took us a long time to gain the trust of some of the more prolific offenders and to build relationships with police and other stakeholders.
“One major thing we’ve learned is the importance of continuity of provision and knowledge in building a good service.”
Chris Grayling, the justice secretary, said the results showed outcomes-based results worked well.
"While the same old approach is having barely any impact on our sky-high reoffending rates, which have hardly changed in a decade, these through-the-gate pilots are getting results," he said.
The Ministry of Justice announced earlier this year that the Peterborough SIB would be closed early because it was not compatible with Transforming Rehabilitation, a nationwide programme which will replace existing probation services for medium and low-risk prisoners, and will also include a payment-by-results element aimed at reducing reoffending.
The SIB structure will be used to work with two cohorts of offenders, and the One Service will be allowed to complete its work with the second cohort. It will receive transitional funding from the Ministry of Justice to continue working with the third cohort up until the point that the prime contractor appointed to oversee probation in the East of England region is able to make a decision about the future of the service.
Hutchison said that the early closure was “regrettable but probably inevitable” due to the difficulty of working separately to the East of England provider and the difficulty of measuring the success of the bond against a control group.