Social impact bond shows positive results but courts criticism
The Peterborough social impact bond has led to a six per cent reduction in recidivism compared with a 16 per cent increase nationally, according to the Ministry of Justice (MoJ).
The figures are based on comparisons between two periods, 2010-2012 and 2008-10. The Peterborough social impact bond aims to reduce recidivism among 3,000 short-sentence prisoners by 7.5 per cent over the period of the bond.
Investors in the social impact bond will receive a return if the number of reconvictions falls by at least 7.5 per cent. If the results are better than this, investors will receive a return of up to 13 per cent per year over an eight-year period.
Social Finance, which manages the social impact bond, has pointed out that the measurement that MoJ has used will differ from those figures being used by the independent assessor of the social impact bond. The figures published by MoJ track six months of re-offending behaviour and are compared to an historic baseline. The social impact bond will be measured on 12 months’ re-offending behaviour and compared to a control group of similar offenders across the country.
Social Finance chief executive David Hutchison said: “The figures offer an insight for the first time into the re-offending behaviour of our clients, relative to the national average and re-affirm the importance of offering targeted interventions to a group with complex needs.”
He added: “We are very proud of the work being done in Peterborough by all our local partners and hope that this will lead to success for the Peterborough social impact bond, which will be determined by the summer of 2014.”
However, there is already criticism of the approach. In the latest issue of Philanthropy Impact magazine, Professor Sheila Bird of Cambridge University and the UK Medical Research Council is quoted saying: “[It] might well be a brilliant success; it might achieve little. But we aren’t going to know either way.” She is critical of the project because it does not use a randomised control sample.
Author of the article Caroline Fiennes says: “Astonishingly, even the Ministry of Justice explicitly acknowledges that the control group may be pointless.”
Another criticism is whether the bond structure itself works. Fiennes says that it will be difficult to know what to attribute the re-offending rates to – whether it’s the money, the interventions or the financing mechanism itself.
She states: “The core problem might be that Social Finance is delivering on a contract: it is not doing social science research, to which distinguishing between possible causes is central.” Without rigorous evaluation, Fiennes says the MoJ won’t know if it is a scheme that should be rolled out nationally.