Warnings over radical prison scheme

Rolling out Social Impact Bonds at prisons across the country could lead to the Government paying twice for the same outcome, according to a report
12 April 2012

Rolling out payment-by-results schemes across the country as part of plans to cut reoffending rates among prisoners could lead to the Government being asked to "pay twice" for the same outcome, a review has warned.

The report on the radical pilot scheme at Peterborough prison, which is believed to be the first in the world to use funding from investors outside Government to cut reoffending, found several agencies in overlapping areas could all claim credit for any positive results.

If no action is taken to address this, "Government and others involved in payouts could be asked to 'pay twice' for the same outcomes", the report said.

The Social Impact Bonds (SIB) at the prison involve investors putting £5 million into projects designed to cut reoffending in a bid to get a return of up to £8 million if they are a success - or lose their investment.

Launching the scheme last September, Justice Secretary Kenneth Clarke said reoffending was the "weakest bit of the criminal justice system" and the scheme would help tackle problems without using taxpayers' cash.

The scheme, run by social investment bank Social Finance, involves 3,000 short-term prisoners who are given intensive help throughout their sentence and when they leave prison.

If reoffending is not reduced by at least 7.5% by the end of the pilot, expected to be in around 2016, investors will get no recompense.

This latest review of the scheme does not provide any assessment of any initial impact on reoffending, but it has warned of problems with a wider roll-out of such schemes.

Mr Clarke said the report, carried out by research firm Rand Europe, was "an important step in this Government's commitment to payment by results and delivery of a more successful criminal justice system".

"Our work here is a world first in any criminal justice system and I know that this report will not only inform our continued progress in payment by results but also be of interest to partners both across the UK and internationally," he said.

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