For decades, incarceration rates have risen substantially in most countries. This raises important questions about prisons as well as how former prisoners are integrating into society. In Italy, 68% of former prisoners commit offences again. This hurts society and costs about €130 million a year in extra state funding.

To help former prisoners reintegrate into society and reduce reincarceration rates, the Department of Penitentiary Administration, which is part of the Italian Ministry of Justice, asked the European Investment Advisory Hub to help conduct a feasibility study for a social outcomes contracting initiative in the Lombardy region.

Social outcomes contracting is an innovative form of procuring social services based on outcomes rather than outputs. This offers new opportunities for combining public and private money, taking advantage of local private sector innovation and entrepreneurship. In a social outcome contract, the company providing the service is paid according to a measurable social impact, rather than according to the completion of a specific set of tasks.

Through the social outcome contract deal in Italy, inmates will improve their skills and knowledge, mainly with vocational training programmes that help them find jobs during the final period of their detention. Upon release, former prisoners will continue in these jobs, reducing the likelihood that they will commit another crime because they are now integrated into the workforce. The feasibility study conducted by the European Investment Advisory Hub will build upon the lessons learned from a pilot programme developed by the Italian Ministry of Justice.

The feasibility study, developed by EIB experts and external consultants, will help the ministry gain a better understanding of the social needs of former prisoners and the root causes of crime recurrence. The study will include a detailed business case, a cost-benefit analysis, a mapping of services to be provided, a list of companies that could carry out the various services required, and identified potential investors. This will ultimately help the ministry identify the best-suited social outcome contract structures to use public resources efficiently, while also attracting specialised social investors into the scheme.