Earlier this week, Prime Minister Gordon Brown gave a speech about "smarter government" and, in it, referenced a new project to pilot the use of social impact bonds. He says:

"What we call social impact bonds – money paid out now to deal at root with the causes not the symptoms of a problem – will reward social investors for work which reduces future social costs, for example, in seeking to lower the reoffending rate of those coming out of prison.

"Effective government action helping, for example millions of carers, does not crowd out social responsibility. it helps to enrich and strengthen it especially in the most hard-pressed communities."

An accompanying report, "Putting the Frontline First: smarter government", outlines how these bonds would work: