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Elliot on Social Bonds

Over at Politik, Richard Harman writes:

Mathew Elliot is in New Zealand at the invitation of the New Zealand Taxpayers’ Union.

Its director, Jordan Williams, says he modelled the New Zealand body on the British one.

Mr Elliot said the Conservative win at this year’s election was the first time since Lord Palmerston was British Prime Minister (1186 – 1892) that there had been a swing to the Government after its first term.

“That shows you can run a good free market election campaign and the electorate will respect you and reward you for that,” he told “POLITIK”.

But though he is claiming a big mandate for smaller Government he (surprisingly) is sceptical about the latest small Government move here, Social Impact Bonds.

“They seem to be going slightly out of fashion in the United Kingdom,” he said.

“They came in about 10 years ago but there have been various scandals about companies taking up the contracts —- falsified figures and that sort of thing.”

The first social impact bond targeted recidivism rates at Peterborough Prison. It began in 2010, so the model is barely 5 years old, not 10. Our report on Social Impact Bonds has some of the background.

The UK Government knows, or ought to know, who is in prison and who has been there before. Recidivism figures do not seem an easy statistic to juke. You cannot lie about how many of your clients stayed out of prison after release – the government will quickly figure it out if you are. You can lie about outputs: how many meetings you have with released prisoners. But where the contracts are on outcomes like recidivism, well, I can’t see how you fake that.

If UK social bond projects have fallen a bit out of fashion it’s, as we understand things, because ministries have been unable to keep their meddling mitts out. The advantage of outcome-based contracting is the flexibility it provides providers in choosing how best to provide and deliver services. That stops working well when multiple ministries each start demanding reports on intermediate outputs all along the way and have preferences over how things be done. That’s the report we’ve heard from those with experience in the field in the UK, and it’s something we need to avoid have happen in the NZ trials.

Stat-juking is always something to watch out for. I’d love to hear specific details about cases of it in the UK social bond experience. We didn’t encounter anything hinting at it when we investigated the area, but it’s always possible we missed something. Absent hearing those kinds of details, I’d be a bit less quick on the draw than Trevor Mallard was here:

About Eric Crampton (87 Articles)
I'm Head of Research with the New Zealand Initiative.

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