I am part of the research team at RAND Europe who are evaluating the Social Impact Bond project at HMP Peterborough.
This project is the first of its kind and it is fantastic to be part of the research team. Below is some information about the project from RAND Europe:
“A SIB is a form of payment by results (PBR) in which funding is obtained from private investors to pay for interventions to improve social outcomes. If these interventions succeed in improving outcomes, this should result in savings to government and wider benefits to society. As part of a SIB, the government agrees to pay a proportion of these savings back to the investors. If outcomes do not improve, investors do not receive a return on their investment.
Because service providers are paid in advance under a SIB, this form of PBR removes the upfront costs of service delivery from government and shifts the financial risk to private investors. Service providers do not bear financial risk, which allows a greater scope for involvement by not-for-profit and third sector organisations. Additionally, SIBs offer investors new opportunities for social investment with a ‘blended return’ (a mix of financial and social return).
In September 2010 the Ministry of Justice launched the first ever SIB for funding public services. Social Finance, a financial intermediary, obtained approximately £5 million of investment funding from private individuals and charities. This fund is being used to pay for interventions for offenders serving short prison sentences (less than 12 months) at HMP Peterborough, a prison in eastern England. If reconviction events fall by 10% or more (compared to a matched control group) the Ministry of Justice will make an outcome payment and investors will have made a return on their investment.
RAND Europe has been commissioned to evaluate the development, implementation and operation of this first ever SIB. Potentially lasting up to eight years, the evaluation will
- identify early lessons from the development and implementation of the SIB to inform other PBR pilots
- examine the services funded by the SIB and their effectiveness at reducing reconvictions by Peterborough prisoners
- assess whether, and if so how, this funding model leads to innovation and greater efficiency
- analyse costs and benefits of the SIB
RAND’s evaluation will provide some of the first evidence on the operation of this funding model, informing the possible development and roll-out of SIBs in other policy areas and in other parts of the UK.”
My role on the project is to help with the planning, data collection, analysis and write up of the three reports that are due over the lifetime of the contract. The Ministry of Justice will be making the first of these reports available to the public later in the year.