Leading article: Could the profit motive empty our prisons?

Share
Related Topics

Complex investment schemes have had a lot to answer for in the past few turbulent years. But that is no reason to look askance at efforts to develop financial products to make private money work for socially desirable ends.

The idea of social impact bonds is not wholly new. Enterprising financiers have long held that they could fund public programmes, such as cutting reoffending rates or dealing with drug addiction, more efficiently than the state.

The difficulty is that designing a social impact bond is almost as complicated as the intractable social problem it might be used to address. The first question is how much a given issue – recidivism, say – costs the state. Trickier still is how definitively to measure the success of a programme to tackle it. Then comes the calculation of a suitable return on an investment in the scheme, to be paid out by the Government from the money it has been saved.

Complicated it may be. But the idea has real potential. That the Government is putting real weight behind it – with the launch of a £40m scheme focused on support for chaotic families – is to be applauded.

With Britain's 46,000 most deprived families costing the state more than £4bn a year, this is certainly an area ripe for investment. But the Government must be wary of banking its savings too soon. Even leaving aside the question of whether extra intervention can help families – and the evidence is mixed – social impact bonds as a funding mechanism are almost entirely untested.

There will be teething problems, but they must not be allowed to rule out the whole idea of private funding for a public good. Supporters of the concept conjure up visions of a whole new asset class revolutionising the management of society's most complex problems. Given all the trouble caused by clever-clever bankers, social impact bonds might even represent some kind of payback.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Argyll Scott International: FP&A Manager Supply Chain

Benefits: Argyll Scott International: Argyll Scott is recruiting for a Permane...

Austen Lloyd: Commercial Property NQ+

£30000 - £50000 per annum + EXCELLENT: Austen Lloyd: COMMERCIAL PROPERTY SOLI...

Argyll Scott International: Retail Commercial Finance Analyst

Benefits: Argyll Scott International: Due to further expansion, a leading inte...

Langley James : Senior Technician; Promotion & Training Opp; Borough; upto £32k

£27000 - £32000 per annum + training: Langley James : Senior Technician; Promo...

Day In a Page

Read Next
Russian President Vladimir Putin and Chinese President Xi Jinping shake hands in Shanghai  

Is Russia and China’s ‘Nato of the East’ more than a Potemkin alliance?

Nigel Morris
A petition calling for Natalie Bennett, the leader of the Green Party, to be included has been signed by nearly 200,000 people  

Let me list the reasons that the Green Party should definitely not be allowed into the TV election debates...

Mark Steel
Synagogue attack: Fear unites both sides of Jerusalem as minister warns restoring quiet could take 'months'

Terror unites Jerusalem after synagogue attack

Rising violence and increased police patrols have left residents of all faiths looking over their shoulders
Medecins sans Frontieres: The Ebola crisis has them in the headlines, but their work goes far beyond West Africa

'How do you carry on? You have to...'

The Ebola crisis has Medecins sans Frontieres in the headlines, but their work goes far beyond West Africa
Isis extends its deadly reach with suicide bombing in Kurdish capital

Isis extends its deadly reach with suicide bombing in Kurdish capital

Residents in what was Iraq’s safest city fear an increase in jihadist attacks, reports Patrick Cockburn
Underwater photography competition winners 2014 - in pictures

'Mysterious and inviting' shot of diver wins photography competition

Stunning image of cenote in Mexico takes top prize
Sir John Major: Negative West End portrayals of politicians put people off voting

Sir John Major hits out at theatres

Negative West End portrayals of politicians put people off voting
Kicking Barbie's butt: How the growth of 3D printing enabled me to make an army of custom-made figurines

Kicking Barbie's butt

How the growth of 3D printing enabled toy-designer to make an army of custom-made figurines
Will Smith's children have made waves with a gloriously over-the-top interview, but will their music match their musings?

What are Jaden and Willow on about?

Will Smith's children have made waves with a gloriously over-the-top interview, but will their music match their musings?
Fridge gate: How George Osborne keeping his fridge padlocked shows a frosty side to shared spaces

Cold war

How George Osborne keeping his fridge padlocked shows a frosty side to shared spaces
Stocking fillers: 10 best loo books

Stocking fillers: 10 best loo books

From dogs in cars to online etiquette, while away a few minutes in peace with one of these humorous, original and occasionally educational tomes
Malky Mackay appointed Wigan manager: Three texts keep Scot’s rehabilitation on a knife-edge

Three texts keep Mackay’s rehabilitation on a knife-edge

New Wigan manager said all the right things - but until the FA’s verdict is delivered he is still on probation, says Ian Herbert
Louis van Gaal: the liberal, the enemy and... err, the poet

Louis van Gaal: the liberal, the enemy and... err, the poet

‘O, Louis’ is the plaintive title of a biography about the Dutchman. Ian Herbert looks at what it tells us about the Manchester United manager
Isis in Iraq: Baghdad hails the retaking of the Baiji oil refinery as the start of the long fightback against the Islamist militants

Isis takes a big step back

Baghdad hails the retaking of the Baiji oil refinery as the start of the long fightback against the Islamist militants
Bill Cosby: America’s beloved TV ‘dad’ or serial rapist?

Bill Cosby: America’s beloved TV ‘dad’ or serial rapist?

Ukip silk bow ties, Green Party T-shirts, and 'Iron Baby' romper suits: How to shop politically

How to shop politically

Ukip silk bow ties, Green Party T-shirts, and 'Iron Baby' romper suits
The science of sex: What happens when science meets erotica

Sex on the brain

Fetishes, dominatrixes, kinks and erotica. They are subjects that should get the crowds flocking to a new exhibition at the Wellcome Collection