06 May. 2014 | Comments (0)
The UK Ministry of Justice (MoJ) last week announced that the Peterborough Prison social impact bond (SIB)—the first SIB in existence—will not be carried through to its full term, because the MoJ will be introducing country-wide reforms to probation and rehabilitation services in the United Kingdom at the end of 2014.
Funding for the intervention, called the One Service, through the SIB model will be halted before the third and final cohort of prisoners is released from the prison in June, prematurely ending the most highly anticipated SIB completion in the market. CivilSociety.co.uk reports that the reforms, entitled Transforming Rehabilitation, will be “a UK-wide payment-by-results project to work with ex-offenders, which is to be launched next year.” The third cohort of Peterborough prisoners that were scheduled to take part in the One Service intervention, funded through the SIB, will now participate in the Transforming Rehabilitation project, eliminating the need for the remainder of the SIB pilot funding. The SIB pilot will continue in its current form until June 2015, when rehabilitation support to the second cohort of prisoners is due to finish. At the same time it canceled the model, the MoJ released performance figures for reoffending rates around the country, calling the rate at which offenders return to crime “depressing.” But early results from the SIB pilot told a different story. The MoJ said: “Before the pilot, for every 100 prisoners released from Peterborough there were 159 reconviction events annually. Under the scheme this figure has fallen to 141—a fall of 11 percent. Nationally, that figure has risen by 10 percent over the same period.”
Informing wider impact
While it’s disappointing that arguably the model’s premiere prototype will not be seen through to maturity, in a way it has served its purpose. After all, SIBs aim to generate more impact for every dollar spent. They’re intended to be a testing ground for social interventions that the government can scale. And in a way that is what’s happened here. The MoJ is rolling out crucial reforms to the probation service through the Transforming Rehabilitation program, and it says those reforms “have been significantly influenced and informed by the project at Peterborough.” With such a dire reoffending rate apparent throughout the UK prison system, and reforms intended to improve that situation informed by an intervention trialed through a SIB model, perhaps the decision to cancel the SIB will, in the long run, teach us more about the impact the model can have than if this pilot had been seen through to completion. These numbers do not mean that repayments have been made to investors. The MoJ says: “The results are not based on the methodology which will be used to assess the success of the Peterborough pilot. Success will be determined based on comparison with a control group of comparable offenders from across the country, which is not available for these interim results.” But the decision to cancel arguably the model’s premiere prototype is far from a death knell for SIBs generally. In fact, just last week the U.K.'s deputy prime minister announced a £30 million (~$51 million) package, all of which will be delivered through SIBs, to help improve the prospects of up to 20,000 vulnerable young people. But in the meantime, we’ll cast our eyes to alternative pilots to get a flavor of results.
About social impact bonds
For those new to SIBs, Social Finance USA, a nonprofit dedicated to mobilizing investment capital to drive social progress, defines them as “a specific type of social impact financing in which funds are raised from investors to provide the social service provider with the working capital to deliver their services.” A SIB’s outcome is predicated on robust social impact metrics that are written into the contract. In short, if the project meets its impact goals, the SIB repays investors at a predetermined interest rate.
You can read more about SIBs at the Harvard Kennedy School Social Impact Bond Technical Assistance Lab, or at the UK Cabinet Office website.