The Gaurdian reports on the creation of an innovative social impact bond which will help fund education and support for ex-offenders. The bond was created through a partnership between the UK Ministry of Justice and Social Finance, whose Development Director is GIIN board member Toby Eccles.

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Private investors will pay for a project to rehabilitate prisoners and receive a return on their money if reoffending rates drop, under a pioneering plan announced by the government today which could eventually the way much welfare work is financed.

The pilot scheme for the so-called social impact bonds will see investors pay £5m towards intensive education and support for short-term prisoners leaving Peterborough prison in Cambridgeshire. A total of 3,000 will be helped over six years by the St Giles Trust, which specialises in working with ex-offenders.

Under the deal between the Ministry of Justice and Social Finance, a private organisation set up by a group of City grandees in 2007, investors will make a profit if reoffending rates fall by 7.5% or more. Profits will increase according to how much money the government saves on not having to prosecute and jail recidivists, up to a maximum return of 13%.

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