Interim figures released by the Ministry of Justice show that the first social impact bond pilot at HM Prison Peterborough has led to a decline in reconvictions since the project began in 2010.
The figures show a decline of six percentage points in the frequency of reconvictions per 100 released Peterborough prisoners, from 87 in the period 2008 to 2010 to 81 in the period 2010 to 2012.
This compares with a 10 percentage point increase nationally over the same periods, from 69 in 2008 to 2010 to 79 in 2010 to 2012.
Social Finance, the social investment consultancy that developed the social impact bond to reduce reoffending in 2010, said the figures published included most of the short-sentenced prisoners in the Peterborough pilot.
But it said that although the figures were encouraging, they did not measure reoffending behaviour over the longer period by which the social impact bond will be judged and they are not compiled on precisely the same basis that will be used by the independent assessor in 2014 to determine whether a payment is due to investors in the bond.
Social impact bonds are a financing mechanism that seeks non-government investment for social interventions. If the interventions are successful, the government commits to repay and reward the investors.
Rob Owen, chief executive of St Giles Trust, said: "I think it has been a huge endorsement for the assessment modelling. I think these early results show you really do need targeted interventions for this client group to meet their complex needs."
The early results demonstrated that this type of payment-by-results funding model could be very effective for charities that were good at delivering results, he said.
"It is a very proud day for social finance. The work we are putting in is helping our clients turn their lives around and beginning to show savings for taxpayers by bringing down reoffending rates," he said.
Inez Smith, development director of YMCA Cambridgeshire & Peterborough, which has been involved with providing health and fitness services for the pilot, said: "It is very encouraging to see these figures. There has been a lot of work happening locally to make the initiative a success and it is good to know that this is paying off."
The investors will receive payments from the Ministry of Justice and the Big Lottery Fund if the One Service reduces the rate of reoffending. Social Finance raised £5m from investors to pay for the service for all short-sentenced male offenders – those who serve under 12 months – being released from Peterborough.
Nick O’Donohoe, chief executive of the social lender Big Society Capital, said: "The results from Peterborough, although not conclusive, suggest that the programme is having an impact on reducing recidivism. This will encourage more government departments, local authorities and others to use social impact bonds as a way of funding innovative intervention programmes to meet a broad range of social challenges."