The Peterborough SIB: Reflections from David Robinson
Thursday, 27th July 2017
By David Robinson — chair of the Peterborough SIB Advisory board and led Gordon Brown’s Council on Social Action
It was back in 2008 that this journey began. The incoming Prime Minister encouraged his new Council on Social Action to find innovative funding models, the Sainsbury Foundation responded with a modest grant to the then infant Social Finance and SF embarked on the exploration of an idea that was first christened Contingent Revenue Bonds.
Despite the PM’s support Treasury officials were not immediately convinced. They worried that returns would be too low and fail to attract investment. Then they worried that returns would be too high and an unnecessary liability for the tax payer. They thought that a pilot would be too small to demonstrate any capacity for savings. Then they thought that a big rollout would be too risky for an idea that was untried.
It was a patient negotiation driven with passion, commitment and skill by the Social Finance team. Arrangements with the Ministry of Justice weren’t ultimately finalised until the closing weeks of the Brown government. Agreement before the election felt important but we needn’t have worried. The new PM was, if anything, even more supportive of the idea.
This political support was necessary but it also carried a price. Scrutiny would be intense and expectations high, some unreasonably so. Social Impact Bonds don’t, as some seemed to believe, replace public funding and they can’t make up for expenditure cuts but they do have a useful part to play. We need innovation in the social sector. Innovation incurs risk and is inherently difficult for public funders. The SIB is a mechanism for funding innovation, ultimately and if successful, from the public purse but at no risk to the tax payer.
Like any other kind of early stage investment some would succeed and some wouldn’t but for the sake of the model it was very important indeed that the first one worked. Political support, and indeed investor confidence and practitioner goodwill would evaporate very quickly if Peterborough failed.
That’s why I am particularly pleased with the financial and social results that have been announced today. The Peterborough Social Impact Bond reduced reoffending of short-sentenced offenders by 9% overall compared to a national control group. This exceeds the target of 7.5% set by the Ministry of Justice and the Big Lottery Fund. Seven years later the 17 investors in the Peterborough Social Impact Bond will receive back their capital investment together with a small return.
This first, £5m programme was relatively small but with it we have shown the importance and the value of long — term impact driven funding. The multi-agency intervention providing responsive and sustained assistance to people stuck in the reoffending loop has worked, it has provided appropriate reward for our risk taking partners and, most important of all, it has shown the transformative power of high quality, often peer led, support for determined people in difficult circumstances.
Others have adopted and adapted the funding design — there are now 89 SIB financed projects mobilising more than £300m of investment in 19 countries,
I have one major regret. The MoJ decided to cancel the final cohort in our three cohort programme because the new “transforming rehabilitation” reforms were introduced. In my mind, it made no sense to curtail an innovative project when the learning was unfinished and it was a particularly frustrating that rumours wafted out that the SIB was unsuccessful when the opposite was true. We lost the opportunity to build on our own learning and there remains a deep frustration that more of the operating model was not incorporated into the new national rehabilitation programme.
Today’s results won’t make up for the lost momentum or, restore the momentum we had built in Peterborough. But I hope that they do banish any lingering doubts about the first SIB funded project. Social Impact Bonds never were, and never will be, the answer to everything but the Peterborough project was a very good start. I am grateful to all who played a part at every stage in the journey.