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Social impact bond pilot to be replaced by 'alternative arrangement'

HMP Peterborough
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Social impact bond pilot to be replaced by 'alternative arrangement'

Finance | David Ainsworth | 25 Apr 2014

The third tranche of the pilot social impact bond project working with offenders at Peterborough Prison will be replaced with an “alternative funding arrangement”, the Ministry of Justice has decided.

The nature of the new arrangement has not been confirmed, but it will not a social impact bond (SIB).

The Peterborough project works with prisoners released after short sentences to ensure they do not reoffend. The project 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 intended to work with three cohorts of 1,000 offenders, and aimed to reduce the level of offending by at least 10 per cent compared to results in a national control group. It was intended to test the effectiveness of the SIB model, but the model has already taken off, with 14 now running in the UK and around 100 proposed worldwide.

Its funding model is being replaced because it is not compatible with the funding arrangements of Transforming Rehabilitation, a UK-wide payment-by-results project to work with ex-offenders which is to be launched next year. The nature of the alternative arrangement has not been confirmed.

Transforming Rehabilitation will contract out work with all low and medium-risk prisoners to a series of prime contractors from the private and voluntary sectors. One of those contract areas will include Peterborough, and the contractor will have responsibility for those being released from Peterborough Prison.

The One Service, the organisation currently delivering the Peterborough SIB, will continue to deliver services up until the Transforming Rehabilitation contractor starts working. After that point, the prime contractor will have the option of leaving the One Service in place, merging it into its own service, or replacing it altogether.

SIB 'is working'

As yet, no money has yet been paid out to investors because an independent assessment of the project’s success has not been carried out. The first payment is likely to be triggered in the summer, if an assessment of the One Service’s performance compared to a control group is successful.

However interim indications indicate that the project is working. According to official statistics published yesterday by the Ministry of Justice, there were 141 reconviction events per 100 offenders among prisoners released from Peterborough between 9 September 2010 and 1 July 2012 – the first cohort of the SIB.

“This compares to an average of 159 reconviction events per 100 offenders released from Peterborough between September 2008 and June 2010; a fall of 11 per cent,” the report said. “Nationally, the equivalent figures show a rise of 10 per cent from 143 to 156 reconviction events per 100 offenders.”

Proud of achievements

A spokeswoman for Social Finance said the project was not being shut down because of problems with the SIB model, but because it had demonstrated its effectiveness.

“We are very proud of what we have achieved so far,” she said. “The social value of the Peterborough Social Impact Bond lies in its flexibility to offer a well-resourced and responsive service to prisoners in custody, through the gates and in the community.

“Offenders have found that the offer of support that is voluntary, proactive, non-judgemental and flexible to be invaluable.”

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