A study of the government’s social impact bond pilot project at HM Prison Peterborough has found that the first phase of the scheme did not reduce the number of reconvictions sufficiently to trigger payments to investors.
The study by QinetiQ and the University of Leicester shows a fall in reoffending of 8.4 per cent compared to a national comparison group, but reoffending rates were required to drop by 10 per cent in order to trigger payments to investors under terms set out by the Ministry of Justice.
There were 142 reconvictions per 100 prisoners in Peterborough, compared with 155 reconvictions per 100 prisoners in the control group.
SIBs are financing mechanisms that seek non-government investment for social interventions. If the interventions are successful, the government commits to repaying and rewarding the investors.
A total of 17 foundations committed £5m in 2010 to fund a series of rehabilitative interventions for three groups of 1,000 male offenders sentenced to less than 12 months at Peterborough prison.
However, investors will get their money back in 2016 if there is an average fall in reconviction events of at least 7.5 per cent across the first and second groups. There were intended to be three groups, but the third group will no longer go ahead after the pilot was cancelled by the MoJ in April.
The scheme will instead be replaced by Transforming Rehabilitation, a nationwide outsourced programme that will bring everyone released after short sentences into schemes designed to stop them offending again. The pilot had been scheduled to take place over seven years.
Julian Corner, chief executive of the LankellyChase Foundation, an investor in the SIB, said: "Based on these results, we are optimistic that the second cohort will get much closer to that 10 per cent figure; so I would describe the results as encouraging, given the inevitable start-up challenges that something this ambitious faces."
A spokeswoman for Social Finance, which launched the SIB in 2010, said: "Our goal has always been a 7.5 per cent reduction and we had an early opportunity for investors to receive their money, but if we continue performance as is, then investors are on course to get their capital back in 2016. If we improve performance, we’re hoping that not only will they get their capital back, but they’ll get a return. I can’t realistically tell you what sort of return that will be, because I just don’t know."
Rob Owen, chief executive of St Giles Trust, one the charities delivering the pilot programme, said: "Any reduction in reoffending – even very low single-digit reductions – are really hard-earned and hard-fought-for. These are very encouraging results, about as robust as it gets. They are beginning to show why people have such faith in the concept. It’s almost two fingers to the doomsayers."
The Justice Secretary, Chris Grayling, said in a statement: "The same old approach is having barely any impact on our sky-high reoffending rates, which have hardly changed in a decade – but these through-the-gate pilots are getting results.
"For too long, we have released prisoners back onto the streets with £46 in their pockets and little else, in the hope they would sort themselves out — it’s little wonder things haven’t improved."