A useful article questioning the government logic (the latter is probably an oxymoron) of pulling the plug on the Peterborough bond when it was doing well in favour of a more conventional outsourcing deal. The politics of the UK’s fractious (and barely competent) coalition not to mention a broadly incompetent Whitehall civil service are doubtless at the epicentre of this issue.

Nevertheless, the key is the fallout for SIBs and hopefully that will not be significant.

Analysis: Why The Social Impact Bond At Peterborough Prison Is Being Halted
Edward Lander & Stephen Cook – Third Sector

Two recent announcements by the government have reopened debate about social impact bonds, which are pioneering new ways to finance projects that tackle social problems: non-government investors are asked to fund the projects, usually run by charities or social enterprises, and are reimbursed and rewarded with a dividend if the project is successful.

The first announcement was that the country’s first SIB, which finances a project by charities to reduce reoffending by short-sentence prisoners released from HM Prison Peterborough, will not continue into a third year, despite the fact that preliminary figures indicate the project was having some success.

The second announcement, which came in the same week from the Deputy Prime Minister, Nick Clegg, was that the government would set aside £31m for SIBs for two new projects designed to help young people improve their skills and get into work, the Youth Engagement Fund and the Fair Chance Fund.

The Ministry of Justice made the announcement about the Peterborough project in the context of Transforming Rehabilitation, a new outsourced programme that will, for the first time, bring everyone released after short sentences into schemes designed to stop them offending again. One contract area for the programme includes Peterborough.

Transforming Rehabilitation will work on a payment-by-results model, as do SIBs, but will be funded conventionally by the government and commissioned from external providers. The MoJ decided that the contractor appointed to deliver the service in that area should decide how to take things forward.

Despite the logic of this decision, the two announcements have had the effect of seeming to send mixed messages. Are all government ministers really behind SIBs, or just some? And why pull the plug on a pioneer programme that appears to be working, in favour of a conventionally financed outsourced contract?