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| Version 1 | Version 2 |
|---|---|
| Private backers fund scheme to cut prisoner reoffending | Private backers fund scheme to cut prisoner reoffending |
| (about 1 hour later) | |
| A "payment-by-results" pilot project aimed at cutting reoffending is set to officially begin. | A "payment-by-results" pilot project aimed at cutting reoffending is set to officially begin. |
| Investors have put £5m in social impact bonds to fund rehabilitation work with 3,000 Peterborough Prison inmates. | Investors have put £5m in social impact bonds to fund rehabilitation work with 3,000 Peterborough Prison inmates. |
| They could earn a return of up to £8m from the government and the Big Lottery Fund if their cash helps rehabilitate criminals. | They could earn a return of up to £8m from the government and the Big Lottery Fund if their cash helps rehabilitate criminals. |
| Labour gave the groundbreaking scheme the go-ahead but new Justice Secretary Ken Clarke has fully embraced it. | Labour gave the groundbreaking scheme the go-ahead but new Justice Secretary Ken Clarke has fully embraced it. |
| The government has said the pilot is the first project of its kind in the world. | |
| Mr Clarke has indicated the scheme, which may also cut court and jail costs, might be introduced in other prisons in England and Wales if it is successful. | |
| The social impact bond scheme is jointly run by the Ministry of Justice and Social Finance, an ethical investment bank run by a former top City banker. | The social impact bond scheme is jointly run by the Ministry of Justice and Social Finance, an ethical investment bank run by a former top City banker. |
| The money raised by Social Finance from charitable trusts and social investment groups will fund organisations including the St Giles Trust, a specialist charity with a proven record in rehabilitating offenders. | The money raised by Social Finance from charitable trusts and social investment groups will fund organisations including the St Giles Trust, a specialist charity with a proven record in rehabilitating offenders. |
| Earlier this year the trust href="http://www.stgilestrust.org.uk/News/446435/economic_study_shows_support_for_prison_leavers_cuts_crime.html" title="St Giles Trust economic study" >published an economic evaluation of its Through the Gates rehabilitiation programme which suggested that the government saved £10 for every £1 invested in such schemes. | |
| If the money cuts reoffending, this scheme could return up to £8m to investors, comparable with an annual return of 7.5% in a conventional bond-market investment. | |
| Reoffending among the target group must fall by at least 7.5% to trigger the dividend payments in each of the six years of the bond's operation. | Reoffending among the target group must fall by at least 7.5% to trigger the dividend payments in each of the six years of the bond's operation. |
| No guaranteed return | No guaranteed return |
| The return on social impact bonds is seen as a share of the financial benefit gained by society made when a criminal goes straight. | The return on social impact bonds is seen as a share of the financial benefit gained by society made when a criminal goes straight. |
| But as with other finance bonds, there is no guarantee of a return and investors could lose all of their money if reoffending does not fall. | But as with other finance bonds, there is no guarantee of a return and investors could lose all of their money if reoffending does not fall. |
| The scheme was originally launched by Labour ministers before the general election, but has had cross-party support since. | The scheme was originally launched by Labour ministers before the general election, but has had cross-party support since. |
| Male prisoners sentenced to less than a year at Peterborough Prison will take part in the scheme. | Male prisoners sentenced to less than a year at Peterborough Prison will take part in the scheme. |
| Specialists in cutting rehabilitation will give each inmate intensive help to reform throughout their sentence and continue the high levels of support once they walk through the prison gates. | Specialists in cutting rehabilitation will give each inmate intensive help to reform throughout their sentence and continue the high levels of support once they walk through the prison gates. |
| Mr Clarke said that reoffending was the "weakest bit of the criminal justice system" and that the radical bonds would help tackle it without using taxpayers' money. | Mr Clarke said that reoffending was the "weakest bit of the criminal justice system" and that the radical bonds would help tackle it without using taxpayers' money. |
| "It pays by results," said Mr Clarke. "We're going to pay what works and what works should therefore grow and what doesn't work will vanish. | "It pays by results," said Mr Clarke. "We're going to pay what works and what works should therefore grow and what doesn't work will vanish. |
| "I like the innovative funding, the payment by results, the collaborative groups, and if it succeeds it will grow and if it doesn't, by that time we will be trying something else. | "I like the innovative funding, the payment by results, the collaborative groups, and if it succeeds it will grow and if it doesn't, by that time we will be trying something else. |
| "But sooner or later, something has got to be done about reoffending." | "But sooner or later, something has got to be done about reoffending." |
| Social Finance said there would be indications of whether the project was succeeding within a year but the full return would not be known until the end of the six-year investment term. | Social Finance said there would be indications of whether the project was succeeding within a year but the full return would not be known until the end of the six-year investment term. |
| Social Finance director Emily Bolton said: "Investors benefit and the government gets some cost savings. The better the reductions in reoffending, the higher the investors' return. | Social Finance director Emily Bolton said: "Investors benefit and the government gets some cost savings. The better the reductions in reoffending, the higher the investors' return. |
| "It's not taking money out of the system, in fact it's enabling us to transfer the money to more socially valuable things." | "It's not taking money out of the system, in fact it's enabling us to transfer the money to more socially valuable things." |
| But Paddy Scriven, general secretary of the Prison Governors Association, said the scheme must not exclude the most persistent offenders. | But Paddy Scriven, general secretary of the Prison Governors Association, said the scheme must not exclude the most persistent offenders. |
| She said: "If we're looking at tackling reoffending, then this is a very positive step, providing it works. | She said: "If we're looking at tackling reoffending, then this is a very positive step, providing it works. |
| "The thing that has to be guarded against is that if this sort of scheme spreads and it is payment by results, that the not-for-profit sector people and charities that are administering it don't cherry-pick the most likely successes and leave the very hardline cases to the Prison Service, or more importantly the Probation Service. Then the success is measured unevenly." | "The thing that has to be guarded against is that if this sort of scheme spreads and it is payment by results, that the not-for-profit sector people and charities that are administering it don't cherry-pick the most likely successes and leave the very hardline cases to the Prison Service, or more importantly the Probation Service. Then the success is measured unevenly." |
| Jon Collins of the Criminal Justice Alliance, a reform campaign group, said: "This exciting pilot project has the potential to successfully rehabilitate thousands of prisoners by providing them with the support that they need to turn their lives around. | Jon Collins of the Criminal Justice Alliance, a reform campaign group, said: "This exciting pilot project has the potential to successfully rehabilitate thousands of prisoners by providing them with the support that they need to turn their lives around. |
| "Bringing money in from new investors to fund this work will also ensure that it is able to continue at a time when the Ministry of Justice's budget is facing severe cuts." | "Bringing money in from new investors to fund this work will also ensure that it is able to continue at a time when the Ministry of Justice's budget is facing severe cuts." |